The real problem plaguing the economy is not jobs but lies in the existing wage structure, said National Skill Development Corporation (NSDC) CEO Manish Kumar. Wh7ile the economy is growing at a higher rate, labour is not getting an increased wage, he said, adding that onus is on the private sector to pay better salaries to the workers.
A recently leaked media report citing the ‘Periodic Labour Force Survey’ (PLFS) published by the National Sample Survey Office (NSSO) had said the unemployment rate in India stood at 6.1 per cent in the period of 2017-18, which is a high rate in the last 45 years. The government hasn’t still officially published this report that was prepared in the month of December 2018.
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Citing a book, Rise of Robots, penned by Martin Ford, Manish Kumar said that both return to capital and rate of return go up for a graph plotted between the two variables during the period between 1920 and 1985.
“……I invest money and also give it to labour, so wages go up. The labour puts in more effort and everyone is benefited. But in 1985, when the rate of return to capital was high, the rate of return to labour plateaued. This is the period when computers were introduced. And when the Internet came in, the rate of return to capital spiked further. But labour was not getting a high wage despite high economic growth,” he said at The Indian Express event.
He also added: “During our sampling, we took into account a labourer with a wage of Rs 9,000. His expectation of receiving a salary of Rs 18,000 within a year is a mismatch. So, he will not be willing to stay in one place.”
The labourer would only stabilise when he reached the Rs 19,000-mark, he added. Earlier last year, TeamLease Chairman Manish Sabharwal had also echoed similar views when he had said that more than jobs, wages pose real problem to the economy. The answer lies in the formalisation and financialisation of the economy, he had told The Indian Express.