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Labor costs in India’s organized manufacturing sector
Jessica R. Sincavage, Carl Haub, and O.P. Sharma
Jessica R. Sincavage is a supervisory economist in the Division of International Labor Comparisons, Bureau of Labor Statistics; Carl Haub is a senior demographer and the Conrad Taeuber Chair of Information at the Population Reference Bureau; and O.P. Sharma is the former Deputy Director of Census Operations in India. Email: sincavage.jessica@bls.gov or chaub@prb.org
Compensation costs in India’s organized manufacturing sector were 91 cents per hour for all employees in 2005; this amounted to about 3 percent of hourly labor costs in the U.S. manufacturing sector, but was above BLS estimates of labor costs in China.
India’s important role in the global economy is perhaps best exemplified by its membership in the G-20, the group that has replaced the G-8 as the major international economic forum. Although India is the fourth-largest economy in the world, accounting for 4.6 percent of the world’s GDP, the value of India’s exports in 2007 was only 1 percent of the world’s total exports.1 Many factors affect the level of a country’s exports and the growth of its GDP. The Government of India’s National Manufacturing Competitiveness Council has identified manufacturing as "the main engine for economic growth and creation of wealth" for the country.2 Currently, the Council believes that India’s export levels are far below its potential. India has been identified as a potential manufacturing giant by outsiders, as well, and has generated interest in the global marketplace because of its low cost of labor and large population.
Because of India’s economic prominence, and in light of BLS’s history of providing comparative statistics, BLS has undertaken a research project to study the manufacturing industry in India, supported by the expertise of coauthors Haub and Sharma. This article presents, for the first time, BLS estimates of compensation in India’s "organized" manufacturing sector—the portion of the country’s manufacturing activity that is formally registered with Indian state governments, making it subject to regulation. BLS estimates that in 2005, the latest full year for which data were available at the time this article was written, employers in India’s organized manufacturing sector compensated employees at a mean rate of $0.91 an hour—approximately 3 percent of the compensation level of manufacturing employees in the United States. (All averages referred to in this article are means.)
This excerpt is from an article published in the May 2010 issue of the Monthly Labor Review. The full text of the article is available in Adobe Acrobat's Portable Document Format (PDF). See How to view a PDF file for more information.
Footnotes
1 "Table. PPP Conversion Factors and Share of Global Output, 2007" (Washington, DC, International Monetary Fund, January 8, 2008). Visit www.imf.org/external/pubs/ft/survey/so/2008/res018a.htm and click on "Link to PPP data" under "Related Links (visited Apr. 26, 2010); WTO: developing, transition economies cushion trade slowdown, Press/520/Rev. 1 (World Trade Organization) Apr. 17, 2008, Appendix Table 3, "Merchandise trade: leading exporters and importers, 2007," on the Internet at www.wto.org/english/news_e/pres08_e/pr520_e.htm#appendix_table3 (visited Apr. 26, 2010).
2 The National Strategy for Manufacturing (Government of India National Manufacturing Competitiveness Council, March 2006), 1.1, p. 2, on the Internet at http://nmcc.nic.in/pdf/strategy_paper_0306.pdf (visited Apr. 26, 2010).
International Labor Comparisons
International comparisons of hours worked: an assessment of the statistics.—May 2009.
International labor market comparisons.—Apr. 2006
International comparisons of manufacturing compensation costs.—October 1995.
International comparisons of manufacturing compensation costs.—November 1994.
Manufacturing costs, productivity, and competitiveness: 1979-93.—October 1994.
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