The most important determinant of economic progress is consistent growth in
household and business earnings. The organised, government as well as the private, sector is
expected to lead the way in providing quality employment. The private sector follows the
government wage levels and leads the value creation activity through growth in productivity and
investment in innovation.
The organised sector’s margins come from growth in productivity and better pricing as the demand
for higher value-adding consumption goods and services increases with increasing real household
earnings – creating a virtuous cycle of growth and prosperity. As observed above, India has not been
able to build this virtuous relationship. The recent unrest among youth is a consequence of India’s
inability to build the virtuous relationship between wage and profit growth.
In this paper we state that India’s employment and wage growth crisis is an economic crisis that has
been in the making for more than two decades. It has only got worse over the years.
We, therefore, need the Indian government, at levels, to recognise that the government job creation
is as important as the organised private sector job creation, as the government wages provide a
reference for private sector wage level.