hawk31981
Neville Gama
Salaries in India have been rising over the last few years. But should India worry?
Rising wages mean, productivity increases as Indian manufacturing and services become globally competitive. The wage increases also reflects a shortfall of skilled labour. Thus over a period of time the rising fortunes of the skilled sector may limit the vitality of industries that employ the unskilled/uneducated labour. From a slow growing country India has metamorphasized into a bunch of growth centers with performance more related to the capabilities of individual states. On one hand we have states such as
Karnataka, Maharashtra, Gujarat and Tamil Nadu, have grown rapidly while there are also states such as Uttar Pradesh, Bihar, Madhya Pradesh and Rajasthan that are lagging behind.
This difference is not just related to growth but also to the areas of specialization
The fast -growing states are increasingly specialising in skill-based services (information technology, finance and telecommunications) and skill-based manufacturing (pharma).
A big question is how the lagging states, with their large populations and attendant political power, can catch up. India’s education system definitely needs to be revamped if the recent benefits of the economic boom are to be widely shared. Improvements in governance and infrastructure are also necessary to attract investment and create jobs. However, even if all these much needed reforms ever take place (no thanks to our selfish politicians) there will be a competitive pressure on the other sectors from the fast expanding and high paying service/ high-skill based sectors . Textile plants need supervisors, software companies require programmers, and they both require managers. However with the increase in the salaries of these managerial positions the profitability of the labour intensive industries is being reduced and leading then to be unable to compete with other global players as margins are extremely low already. Thus the high growth of the service/skill based sectors is actually killing of the high labor intensive manufacturing industries. Also the rise in skilled wages leads to an exodus of skilled labour from the states lagging behind to the fast -growing ones.
So what is the solution to this problem especially if we consider the fact that to increase jobs for the unskilled sector we actually need more people in the skilled sector thus making it a very vicious cycle.
It would be nice to have the opinion of all on this topic as to what could be a possible solution and how this can be solved this is also known as the Bangalore Bug
Rising wages mean, productivity increases as Indian manufacturing and services become globally competitive. The wage increases also reflects a shortfall of skilled labour. Thus over a period of time the rising fortunes of the skilled sector may limit the vitality of industries that employ the unskilled/uneducated labour. From a slow growing country India has metamorphasized into a bunch of growth centers with performance more related to the capabilities of individual states. On one hand we have states such as
Karnataka, Maharashtra, Gujarat and Tamil Nadu, have grown rapidly while there are also states such as Uttar Pradesh, Bihar, Madhya Pradesh and Rajasthan that are lagging behind.
This difference is not just related to growth but also to the areas of specialization
The fast -growing states are increasingly specialising in skill-based services (information technology, finance and telecommunications) and skill-based manufacturing (pharma).
A big question is how the lagging states, with their large populations and attendant political power, can catch up. India’s education system definitely needs to be revamped if the recent benefits of the economic boom are to be widely shared. Improvements in governance and infrastructure are also necessary to attract investment and create jobs. However, even if all these much needed reforms ever take place (no thanks to our selfish politicians) there will be a competitive pressure on the other sectors from the fast expanding and high paying service/ high-skill based sectors . Textile plants need supervisors, software companies require programmers, and they both require managers. However with the increase in the salaries of these managerial positions the profitability of the labour intensive industries is being reduced and leading then to be unable to compete with other global players as margins are extremely low already. Thus the high growth of the service/skill based sectors is actually killing of the high labor intensive manufacturing industries. Also the rise in skilled wages leads to an exodus of skilled labour from the states lagging behind to the fast -growing ones.
So what is the solution to this problem especially if we consider the fact that to increase jobs for the unskilled sector we actually need more people in the skilled sector thus making it a very vicious cycle.
It would be nice to have the opinion of all on this topic as to what could be a possible solution and how this can be solved this is also known as the Bangalore Bug
