The current “cacophony of jobless growth” is not correct as the country is going through an era of declining labour productivity growth, according to a research report.
“In fact, we are now in an era of low wage growth. The overall productivity growth remains relatively stagnant (9.4-9.9 percent) in the last six years, barring FY15,” State Bank of India's Ecowrap report said.
Before 2008, productivity gains in the manufacturing space were more significant. A drop in bargaining power along with a rise in mark-up of industries explained the gradual decline in labor share, leading to a rise in productivity, the report said. However, after 2008, a slowdown in global trade led to a decline in labour productivity growth, it said.
India, according to the report, lags significantly in terms of labour productivity. Even in the next decade, that is by 2021, it estimates that India's output per worker will rise to just $6,414 per year compared to China's $16,698. This gap needs to be bridged through policy changes, the report said.
This comes after a leaked unemployment survey reportedly showing the unemployment rate in the country at a 45-year high created a political furore. NITI Aayog Vice Chairman Rajiv Kumar then said it was a draft report and not a final copy.
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