Collapse in Wage/Salary Income Growth in India, 2011-12 to 2017-18

Abstract

A comparison of the growth rate of wages and salaries in India over two time periods (2004-05 to 2011-12 and 2011-12 to 2017-18 shows that wage growth virtually collapsed in the second period. Surprisingly, this collapse was even more dramatic among regular workers and in urban areas and in the higher deciles of wage/salary earners. These results show that the manifestations of the economic crisis were already quite widespread and were not only restricted to the informal sector or to the urban/rural poor. The results also confirm other results and analyses which have also suggested that genesis of the economic crisis and slow down which is currently being debated goes back several years and is related to a series of economic policy shocks since the early years of the last decade, which intensified after demonetization and subsequent policy shocks. The National Sample Survey Organization’s Employment Surveys (now substituted by the Periodic Labour Force Survey of the renamed National Statistical Office) provide the most exhaustive data on employment and on wages and salaries in India. The Employment-Unemployment Surveys (EUS) and the Periodic Labour Force Surveys (PLFS) follow a different design but nevertheless provide robust estimates of employment and wages at the national and state level. This paper has compared the changes in weekly real earnings from wages/salaries between two time periods viz. 2004-05 to 2011-12 and 2011-12 to 2017-18. It concludes that wage growth collapsed in the latter period and even turned negative for several employment segments. It also shows that the wage and salary growth …