Topic-Indian economy : Issues
6) Discuss why have conditions for workers in most parts of the world not improved commensurately given the global output recovery of recent years?(250 words)
Why this question
The article discusses the fact that despite global growth seeing an upturn in recent years, wage growth for workers has not increased at the same pace. The article analyses the reasons behind it and suggests alternate policy measures. In India too, wage growth across sectors has not kept pace and hence this question will help you understand the reasons and give suggestions for improvement.
Key demand of the question
The question expects you to first highlight the status of global growth and bring out the fact that wage growth has not kept pace. Thereafter, we need to delve deeper into the issue to understand why this is so. Your analysis need not necessarily be limited to Indian situation but should also bring out the issues with neoliberal policies all around. Thereafter, we need to give suggestions for bringing about a change in status quo.
Discuss – This is an all-encompassing directive – you have to debate on paper by going through the details of the issues concerned by examining each one of them. You have to give reasons for both for and against arguments.
Structure of the answer
Introduction – Highlight the findings of ILO. The International Labour Organization’s (ILO) latest Global Wage Report finds that, excluding China, real (inflation-adjusted) wages grew at an annual rate of just 1.1% in 2017, down from 1.8% in 2016. That is the slowest pace since 2008.
- Bring out the situation in developed and developing countries. Also highlight that gap between wage growth and labour productivity remained wide in 2017. In many countries, labour’s share of national income is still below the levels of the early 1990s.
- Discuss the reasons behind the same
- large labour-surplus economies’ deepening integration into the global market, together with increased reliance on automation and Artificial Intelligence, has weakened workers’ bargaining power and shifted labour demand into very specific and limited sectors.
- Highlight the political reason behind the same – governments focused solely on improving “labour-market flexibility” have pursued policies that privilege employers’ interests over those of workers, not least by undercutting workers’ ability to organize. An obsession with fiscal consolidation and austerity has prevented the kind of social spending that could expand public employment and improve workers’ conditions. The current regulatory environment increasingly allows for large corporations to wield power without accountability, resulting in higher monopoly rents and greater bargaining power. Etc
- Discuss the alternate approach followed by China and how it has been able to get wage growth. Explain that in China what has happened is productive sector has absorbed surplus labour and push up wages over all. China has augmented this effect through systematic state policies designed to improve labour conditions.
- Give suggestions for improvements – suggest tweaking the neoliberal paradigm, better policies to protect workers rights etc.
Conclusion – Summarize your findings as regards to the reason behind falling wage growth and suggest way forward.