Finding the income gap in factories

Soon after the liberalisation of India’s economy in 1991 the rise in the average annual salary of the non-worker employee rose faster than that of the worker. From 1998-99, the difference became more pronounced and further from 2006-07 became very much more so.

When did the income gap between worker and white collar employee widen? The Central Statistics Office of the Ministry of Statistics and Programme Implementation has released its Annual Survey of Industries 2011-2012 for the factory sector. This small but significant compilation helps trace the evolution and trend of the gap in incomes from 1981-82 to 2011-12.

Using the figures given for wages and number of workers, the annual wages per worker (at current rates for that year) becomes available, so does the annual salary for non-worker employees. From 1981-82, when average wages per worker in the factory sector was Rs 7,197 it took 23 years for the wages to cross Rs 50,000. The rise was faster in the annual salary for non-worker employees which began at an average of Rs 13,325 in 1981-82 and crossed Rs 50,000 in 13 years.

In 1993-94, when the annual salary for non-worker employees crossed Rs 50,000 it was about 1.9 times the annual wages of the worker. In 2003-04 when the annual average wages of the worker crossed Rs 50,000 the annual average salary of the non-worker employee was about 3.1 times more. That gap continued to grow – 3.8 times more in 2007-08 and 4 times more in 2011-12.

While the next Rs 50,000 rise in the annual average wages of the worker took another nine years (from Rs 50,000 to Rs 100,000), over the same period (2003-04 to 2012-13) the annual average salary of the non-worker employee rose from Rs 156,000 to Rs 422,000 (adding the last year as a continuation of the trend, for this MoSPI series halts at 2011-12).