ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

A+| A| A-

Unit Labour Costs as a Tool for Competitiveness and Policy Analysis: A Reassessment

The analysis in this paper shows that while India's unit labour costs in organised manufacturing displays a clear upward trend since 1980 with a decline since the early 2000s, this is exclusively the result of the increase in the price deflator used to calculate the ulc. The labour share in value added of India's organised manufacturing sector has been on a downward trend, from 0.6 in 1980 to 0.26 in 2007. The study also finds that real wages have increased minimally during the period analysed - well below labour productivity - while the real profit rate and unit capital costs have increased substantially. The analysis questions policy recommendations that advocate wage moderation, which result from simply looking at the evolution of the ulc, and that blame the loss of competitiveness on high or increasing wages.

This paper represents the views of the authors and not necessarily of their organisation or the countries that they represent.

Dear Reader,

To continue reading, become a subscriber.

Explore our attractive subscription offers.

Click here

Or

To gain instant access to this article (download).


Pay
INR 236

(Readers in India)


Pay
$ 12

(Readers outside India)

Support Us

Your Support will ensure EPW’s financial viability and sustainability.

The EPW produces independent and public-spirited scholarship and analyses of contemporary affairs every week. EPW is one of the few publications that keep alive the spirit of intellectual inquiry in the Indian media.

Often described as a publication with a “social conscience,” EPW has never shied away from taking strong editorial positions. Our publication is free from political pressure, or commercial interests. Our editorial independence is our pride.

We rely on your support to continue the endeavour of highlighting the challenges faced by the disadvantaged, writings from the margins, and scholarship on the most pertinent issues that concern contemporary Indian society.

Every contribution is valuable for our future.