Social Scientist. v 15, no. 161 (Oct 1986) p. 49.

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Share a/Industrial Wages in Value" Added 1960 to 1980

THE OCCURENCE of major industry-wide strikes in the first few years of the eighties testifies to the processes of change that the organised industrial labour market as a whole seems to be going through. Unlike the early seventies, labour unrest is far less localised now, regionally or industry-wise. Relative incidence of industrial disputes is also increasing, gradually but steadily. These facts can be partially understood by analysing trends in the distribution of industrial income which is characterised by a long-term declining tendency in the share of workers. What makes distributional questions of additional significance is the current context of relaxation of control over private capital, privatisation of the manufacturing sector and growing emphasis on technical innovations that are likely to reduce rates of labour absorption in industry. How the expected increase in productivity is going to be shared becomes a pertinent question. Although concrete policy statements on labour in the present regime are lacking, we can at least review the performance in this regard in the preceding two decades.

Wage share was a subject of considerable interest until the early 1970s, but few studies have appeared since then.1 The present paper, besides updating the statistics, extends the analysis in three respects. Firstly, it recognises that the labour market in India is regionally fragmented. Trends in wage-share, therefore, must be studied with state or region as the unit. Because of limited regional integration, statewise trends in wage-share, insofar as they reflect changes in the relative bargaining power of labour, are likely to influence industrial location. This whole question of the implications of a certain trend in wage-share on basic entrepreneurial decisions was hardly touched in the earlier literature. Locational changes as one of the usual reactions to changes in labour market structure is a possibility of considerable theoretical interest. Specifically, it implies a basic constraint on the effectiveness of organisation.

Finally, the paper places particular emphasis on bargaining and labour market structure as opposed to capital intensity of technology, as explanations for wage-share trends. A strong positive statistical correla-

*Centre for Development Studies, Trivendruro.

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