T H E E C O N O M I C W E E K L Y A N N U A L January, 1957

Real Wages in India 1939-50 Shreekant A Palekar

The question of wage policy has come to the forefront following the demand by the Indian National Trade Union Congress and other trade unions for a blanket rise of 25 per cent in wages. Further importance has been lent to this question by the proposal, which was recently adopted at a conference of State Labour Ministers, to appoint Wage Boards in certain industries. These Boards, it is understood are to undertake the task of wage fixation in the light of trends of wages since 1939.

The First Five Year Flan aimed at restoration of re a[ incomes to the pre-war level. The success of the Second Five Year Plan hinges not only on the proportion of the National Product that is invested for development, but also on the manner in which the bulk of the total National Product is distributed among the various social groups. Dr Palekars study of real wage trends in India from 1939 to 1950, we trust, will be found useful us a basis for further discussion of wages policy in India,

The author who is Director Reviews and Research ) with the Tariff Commission, Government of India, wishes to make it quite clear that the views expressed in this article are his own and do not represent the views of the Government of India or any department of the Government.

The present article forms part of a doctoral dissertation completed under the guidance of Prof T Dunlop and accepted by Harvard University. The author wishes to express his indebtedness to Prof Dunlop for his valuable comments on the original thesis.

D E A L wages i n I n d i a have s o f a r been the subject of very

l i t t l e study. Research in this f ie ld has been hampered by the lack of adequate data . I t was on ly af ter the passing of the Payment of Wages A c t in 1936 t h a t data on wages pe r ta in ing to the various provinces of B r i t i s h I n d i a became avai lable . The annual reports on the admin i s t r a t i on of the Payment of Wages A c t 1936 give figures of the average da i ly number of w o r k ­ers employed and the t o t a l wages paid to them. The A c t came in to force in M a r c h 1937 and regular annua l reports for the var ious States have been published since 1939. I t was, therefore, decided to select, fo r the present w o r k , 1939 as the base year and to place sole reliance on th is source for stat ist ics r e l a t ing to employment and earnings.

Choice of the Base Year The choice of the year 1939 as

the base year has been fur ther gu i ­ded by two other considerations, viz.

(1) Representativeness: the year 1939 in I n d i a m a y be consi­dered to be f a i r l y represen­t a t ive of the period immedia­te ly preceding W o r l d W a r I I .

(2) Ind ia ' s F i r s t F i v e Year P l an w h i c h came in to operat ion in 1951 aims a t res tora t ion of 1939 l i v i n g standards in the count ry and i t was fe l t t h a t a s tudy of rea l wages of i ndus t r i a l worke r s fo r the per iod 1939-50 on base 1939 m a y serve to indicate w h a t the s tandard o f l i fe o f w o r k ­i n g classes was when the P l a n came In to operat ion So that t h e economic effects of

the implementa t ion of the P lan could be assessed pro­perly.

Scope of Wage Da ta The Payment of Wages A c t 1936,

was passed on the recommendat ion of the R o y a l Commission on Labour in I n d i a — W h i t l e y Commission—and pr io r to i ts enactment, there was no l aw in I n d i a r egu la t ing wage payments to i ndus t r i a l workers . The A c t covers a l l persons employed in factories and ra i lways whose wages and salaries do not exceed Rs 200 per m o n t h . ' Under Section 2 ( v i ) of the Ac t , the t e r m "Wages" is defined as fo l lows:

" A l l remunera t ion capable o f being expressed in terms of money w h i c h would , i f the terms of the cont rac t of employment, expressed or implied, were fulf i l led, be paya­ble, whether condi t iona l ly upon the regular attendance, good w o r k or conduct or other behaviour of the person employed, or otherwise, to a person employed in respect of his employment or of w o r k done in such employment, and includes any bonus or other add i t iona l remune­r a t i on of the nature aforesaid w h i c h w o u l d be so payable and any sum payable to such person by reason of the t e rmina t ion of his employ­ment but does no t include:

(a) the value of any house ac­commodat ion, supply of l i gh t , water , medical attendance or other amenities or of any service excluded by general or special order of the Gov­ernor General in Counci l or P rov inc i a l Government ;

An amendment t o raise th i s l i m i t i s under the considerat ion of the Government o f I n d i a .

(b) any con t r ibu t ion paid by the employer to any pension fund or provident, fund;

(c) any t r a v e l l i n g allowance or the value of any t r a v e l l i n g concession;

(d) any sum paid to the person employed to defray special expenses ent i t led on h i m by the nature of his employment ;

or

(e) any g r a t u i t y payable on dis­charge".

P a r t ' B ' and 'C ' States In January 1948, the provisions

of this Act , except sub-section 4 of Section 8, were made applicable to a l l classes of persons employed in coal mines. The A c t has also been extended very recently to P a r t ' B ' and 'C States in I n d i a but owing to the non-ava i lab i l i ty of compara­ble da ta for these States for earl ier years up to 1939, the present s tudy is confined to Par t ' A ' States which , however, account for the major par t of the industr ia l ised sector in the country .

In collect ing the wages da ta f r o m the Payment of Wages A c t Reports, i t was found t h a t the f igure re la t ­i n g to t o t a l wages paid to worke r s took account of the deductions men­t ioned above a n d i t was, therefore, no t necessary to make any fu r the r al lowance for such deductions in the published f igures . I t was only in the case of Madras State Reports t ha t wages pa id to workers in cash a n d in k i n d were separately shown and the la t t e r have been du ly t aken i n t o account i n ca lcu la t ing the average earnings of the worke r s in th i s State. The da ta per ta ins to factories covered under Section,

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2 m ( i ) * , 2 m ( i i ) * and Section 85* of the Factories A c t and wherever possible, the f igure of t o t a l employ­ment and wages has been a r r i v e d a t by t o t a l l i n g the figures for a l l these categories of factories.@

Choice of Method The computa t ion of real wage

indices raised m a n y questions i n ­v o l v i n g a choice between various s ta t i s t ica l techniques. In calculat­i n g the real wage indices for p a r t i ­cular industries, the question which especially arose at the very out­set was: Does such a real wage index have any s ignif icant meaning, especially when the industries are scattered in d i s t an t par ts of the country? Th is is indeed a diff icult question to answer and one wh ich is of pa r t i cu la r relevance in a vast coun t ry l ike I n d i a . ' Even i f one does decide to calculate such indus­t ry-wise indices fo r the count ry as a whole the fo l l owing questions immedia te ly arise: On w h a t basis are the regional indices to be com­bined? Fur the r , w h a t are the weights to be used? S imi la r ly , w h i c h cost of l i v i n g index is to be

*Section 2 m ( i ) of the I n d i a n Fac­tories A c t 1948 applies to a l l indus­t r i a l establishments where a manu­f a c t u r i n g process is ca r r ied on w i t h the a i d of power and where 10 or more persons are employed, whi le Section 2 m ( i i ) applies to such esta­bl ishments employing 20 or more persons and not us ing power. Fac­tories covered by Section 85 are those "no t i f i ed" by the State Gov­ernment to w h i c h the provisions of the A c t are extended by a special not i f ica t ion .

@ The l im i t a t i ons of the Payment of Wages A c t da ta are discussed in a la ter section.

* The po in t is one on w h i c h opi­n ion seems to be divided. Professor Dunlop in a let ter to the au thor wro te : " I am, however, somewhat doub t fu l about the meaning of real wage ra te indices fo r par t i cu la r industries when these industries are no doubt scattered in a va r ie ty of local i t ies" . On the other hand, the Chief S ta t i s t i c ian o f the I L O who was consulted on th is point , wro te : " W i t h respect t o na t iona l indus t ry or general indices, I w o u l d say t h a t the cr i t ic isms r e l a t i n g to heavy local concentra t ion of given indus­tr ies can be met by app ly ing ap­propr ia te employment weights to the var ious wage series. In any event, there is ce r ta in ly no objec­t i o n to a na t ion-wide average wage or r ea l -wage index per s o ­

used as the deflator the regional or the A l l - l n d i a index?

Various methods were clear ly avai lable:

(1) To calculate real wage ind i ­ces fo r the various industries on the basis of a cer tain pre-determined degree of local isat ion and then to take these as representative fo r the indus t ry in the whole country . But , after some consideration and con­sul ta t ion@, i t was though t best to abandon this approach in v iew of bo th the arbi t rar iness a t t ach ing to i t and the non-ava i l ab i l i ty of rel ia­ble data.

(2) I t was also possible to a r r ive at a real wage index for the whole indus t ry by f i rs t averag ing the money earnings over States, using employment weights , and deflat ing the resu l t ing weighted money wage index by an a l l - I n d i a cost of l i v i n g index computed by combin ing the separate regional cost of l i v i n g indices in to a weighted average— the respective populat ion figures being the weights employed. Th i s method was also rejected as i t was fe l t t h a t i t w o u l d be subject to a considerable m a r g i n of error, o w i n g m a i n l y to the errors involved in comput ing an a l l - I n d i a cost of l i v ­i n g index f r o m the regional indices.

THE METHOD USED ( A ) Real Wages of Fac to ry

W o r k e r s

To calculate real wage indices for a pa r t i cu la r i ndus t r i a l group in each State f r o m the respective earnings and cost of l i v i n g data and combine a l l these different indus t ry indices in to a weighted average real wage index for the whole indust ry , the weights being the respective number of worke r s employed. A v a r i a n t of this method wou ld be to compute real wage i n ­dices for each group of industr ies in every State and to average them out, us ing employment weights, to ob ta in a real wage series fo r the whole State, and to average these State-wise indices, us ing t o t a l State employment as weights, to ob ta in an a l l - I n d i a index of rea l wages fo r m a n u f a c t u r i n g as a whole. This Is

@ Professor Pau l H Douglas in a let ter wro te : "The v a l i d i t y of th i s method wou ld depend on your s tandard of h i g h concentrat ion. Off hand, i t wou ld seem tha t th is m i g h t be used as first approxima­t i on In some industries, bu t t h a t unless a l l industries were very h i g h l y concentrated you w o u l d r u n i n t o problems."

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the method adopted in the present, work .

F r o m the f igure r e l a t i ng to the t o t a l annual wages paid and the average dai ly number of workers employed, average annual earnings per w o r k e r for each group of indus­t r y in such State were f irs t compu­ted. Index numbers of money wages were next calculated on base 1939. These indices were deflated by the respective State w o r k i n g class cost of l i v i n g indices to yie ld the index, numbers of real wages w h i c h were finally converted on base year 1939

100. The cost of l i v i n g stat ist ics consisted of m o n t h l y indices on base Augus t 1939- 100, pe r t a in ing to a number of urban centres in each State eg, Gauhat i and Si lchar in Assam State, Bombay, Ahmeda-bad, Sholapur and Jalgaon in B o m ­bay State, and so on. These m o n t h l y indices were first averaged in to annual indices and recast on base year 1939 100. These centre-wise annual indices were averaged for the State as a whole, w i t h the respective centre-wise populations as weights. The indices thus a r r i ­ved at were used to deflate the money wage indices in order to a r r ive at State-wise series of real wages fo r each broad indus t r i a l group in the State. These group-wise real wage series in the State were next averaged out using the employment in the group as weights to a r r ive at a real wage series for the State as a whole f r o m 1939 to 1950. These whole-State real wage series were finally averaged out over a l l the States us ing the t o t a l employment in a l l the i ndus t r i a l groups under the Payment of Wages A c t w i t h i n the State as weights , to a r r ive at a real wage series for I n d i a as a whole f r o m 1939 to 1950.

(B) Real Wages of Workers in Mines

In cer tain par t ' A ' States covered by the present analysis, i t was found tha t the m i n i n g indus t ry const i tuted one of the major indus­tries in the State. I t was, therefore, decided to take due account of the real wage trends of the workers employed in mines so as to make our real wage series more repre­sentative for the State as a whole. (This forms a s tudy by i tself and w i l l be published in a subsequent issue of this paper) .

On l o o k i n g at the real wage series set up by this method, it was fe l t t ha t whi le they indica ted only regional va r ia t ions of rea l

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wages, they d id no t give any idea o f the industry-wise pa t te rn o f changes in real wages in I n d i a . Rea l wage series fo r a l l - I n d i a Indus t r i a l groups were, therefore, calculated f r o m the money a n d real wage indices of the corresponding ind iv idua l b road indus t r i a l groups in each State, us ing the respective State-group employment as weights .

Limitations of the Study At this point i t i s necessary to

d r a w a t ten t ion to cer ta in l imi t a t ions of the present study, so as to avo id possible indiscr iminate or unqualif ied use t h a t m a y be made either of the da ta or of the con­clusions.

F i r s t l y , this study is based on annual per capi ta earnings, w h i c h introduces a cer ta in l i m i t a t i o n owing not on ly to in ter - regional and in te r - indus t ry differences in earnings, bu t also to differences in the method of wage payment . I t m a y be emphasised fu r ther t h a t the study is in terms of index numbers i . e . re la t ive and not absolute real wages as compared w i t h 1939,

Secondly, the .study had to be restr icted to those large and organi ­sed perennial industries registered under the I n d i a n Factories A c t . There was no a l te rna t ive in view of the complete non-ava i l ab i l i ty of employment and wage stat is t ics regard ing the smal l unregistered establishments not f a l l i n g under the Factories A c t . There is reason to believe t h a t the number of such establishments in I n d i a i s f a i r l y large. The f irst Report of the N a t i o n a l Income Commit tee (1951) appointed by the Government of I n d i a disclosed t h a t the con t r ibu t ion of smal l enterprises to the d i s t r ibu­t ion of income d u r i n g 1948-49 was about five times as great as t h a t of large enterprises. To the extent, therefore, t h a t such establishments have been excluded, the study is incomplete. Fur ther , the study is confined to "perennial" industries only. Seasonal industries were lef t out because earnings in seasonal industries are not s t r i c t l y com­parable. Th i s is because workers employed in them are general ly d r a w n f r o m sur rounding ag r i cu l tu ra l regions and they do not depend for the i r l ive l ihood ent i re ly upon their earnings in seasonal factories.

T h i r d l y , the special features of the cost of l i v i n g index numbers in I n d i a introduce an element of uncer ta in ty in the rea l wage indices calculated f r o m them. To ment ion a few, mos t of the cost of l i v i n g

Index numbers avai lable f r o m 1939 have ra ther remote years as base, wh i l e the prevalent system of r a t i o n i n g and cont ro l in cer ta in centres, combined w i t h the periodical non-ava i lab i l i ty of certain art icles included in the index, robs them of much of their significance as guides to actual changes in the cost of l i v i n g .

No Correction for Unemployment Four th ly , the most impor t an t

l i m i t a t i o n of the present study arises f r o m the absence of any correct ion for unemployment . As stated earlier, this is a consideration of m u c h greater significance. A wage s tudy w h i c h fai ls to t ake account of th is fac tor much be considered inadequate, i f no t mis leading. This poin t may be elaborated a l i t t l e fur ther . The absence of correct ion for unemploy­ment inval idates results especially when the object is to a r r ive at the earnings of the w o r k i n g class as a whole. This i s pa r t i cu l a r l y imporan t in analysis of the func t iona l dis­t r i b u t i o n of the net na t iona l income among the different factors of pro­duct ion. I f , however, the study is confined to earnings of those wor ­kers who are employed, the l i m i t a ­t i on tends to disappear. I t was, however, impossible to improve the present analysis by correct ing the wage da ta for unemployment because unemployment stat ist ics are p rac t ica l ly non-existent in Ind ia .*

F i f t h l y , the analysis is ent i re ly confined to P a r t ' A ' States only ; P a r t ' B ' and 'C States had to be excluded as wage statist ics were no t avai lable f r o m 1939 onwards. The A c t came in to force in these States much later . This geographi­cal l i m i t a t i o n does not, however, appear to be very serious when one considers the fac t t h a t P a r t ' A ' States cover between t hem a very large pa r t of the organised indus­t r i a l sector of the I n d i a n economy.

S ix th ly , a note of w a r n i n g must be sounded about the r e l i ab i l i t y of wage statist ics per ta in ing to certain States. On examin ing the employ­ment and wages data r e l a t ing to some States, i t was found t h a t in the case of m a n y industries there zero

' The last decennial Census con­cluded in I n d i a covers for the f i rs t t ime unemployment in the popula­t ion and i t m a y be hoped t h a t comprehensive and reliable un­employment stat ist ics wou ld be avai lable in years to come.

no t on ly numerous gaps from year to year, but some figures, showed such abno rma l var ia t ions as to raise doubts about the i r r e l i ab i l i t y . The best t h i n g to do under these circumstances wou ld have been to o m i t these states al together but such a course wou ld have l i m i t e d the analysis seriously in i ts appl i ­cab i l i t y to the whole count ry There was, therefore, no other choice in the case of these States but to fill i n the gaps by inter­pola t ion. To the extent t h a t this had to be done, the final results have to be interpreted w i t h some reservation.

L imi t a t i ons of Payment o f Wages A c t D a t a F ina l l y , the l imi ta t ions inherent

in the Payment of Wages A c t m a y be noted. I t has already been men­t ioned tha t the Payment of Wages A c t has somewhat restr icted cover­age in as much as it applies only to persons d r a w i n g wages or sala­ries no t exceeding Rs 200 per m o n t h . Besides the number of factories s u b m i t t i n g returns in any par t i cu la r year is general ly less, and sometimes considerably less, t han the number of factories registered. However, in those cases in w h i c h the fac tory had ceased operations bu t had continued on the Fac to ry Register, th is m a y not introduce a serious error . The fac tory o w n ­ers, either owing to i l l i t e racy , ignor­ance or sometimes th rough sheer indifference, do not in some cases submit correct or i n t e rna l ly con­sistent returns. Fur thermore , wh i l e submi t t i ng these returns, the fac­t o r y owners, do not a lways fo l low a u n i f o r m practice regard ing such mat ters as inclusion of the amount of bonus paid to workers , exclusion of supervisory staff etc. Except in the case of Madras, the wages pa id in k i n d are not shown separately nor is there a n y t h i n g in the re­ports to indicate t h a t proper ac­count of such payments h a d been taken in the wage f igures publ ish­ed in the Reports. Ano the r consi­derat ion w h i c h imposes some l i m i ­tat ions on the Payment of Wages A c t stat ist ics relates to the p a r t i ­t ion of the count ry and the merger of the o ld Pr ince ly States w i t h the I n d i a n U n i o n in and after 1947. Owing to these po l i t i ca l changes, comparab i l i ty of these statist ics af ter 1947 suffers. However, a l t e rna t ive calculaions showed that inclusion or exclusion of the Punjab does not make any ma te r i a l difference to the a l l - I n d i a indices of money wages and rea l wages, t hough i t makes

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some difference to the indices of employment . In the case of the merger of the Pr ince ly States, sepa­ra te figures fo r these States were no t Available and i t was, not possible therefore, to exclude the employ­ment a n d wages figures r e l a t ing to the Pr ince ly States f r o m our statis­t ics. Such l im i t a t i ons of data are perhaps invei table when i t relates to such a vas t count ry as I n d i a and some m a r g i n of error is only to be expected when the number of re turns to be handled in the case of la rger States l ike Bombay and West Bengal is very great . '

A l l the above l imi t a t i ons should be properly borne in m i n d before accepting the present analysis as final.

Real Wages In India as a Whole The State-wise as we l l as the i n ­

dustry-wise series of employment, money wages and real wages a long w i t h the i r t r end e l iminated values are b rought together and presented in Table Nos. 1 and 2 respectively. ( I n ca lcu la t ing the a l l - Ind i a series of rea l wages, the question of the non-comparab i l i ty of the Punjab data presented some theoret ica l d i f f icul ty . To meet any possible objection to inc lud ing , w i t h o u t the necessary ad­jus tment , the Punjab indices, al ter­nat ive rea l wage indices fo r I n d i a as a whole excluding the Punjab were calculated a n d i t was found t h a t the exclusion or inclusion of the Punjab does not make any diff­erence to the a l l - I n d i a real wage series).

Striking Features The most s t r i k i n g feature of

Table No. 3 is t ha t by 1949, real wages of i ndus t r i a l workers in I n d i a as a whole jus t managed to catch up w i t h and s l igh t ly exceed their 1939 level, af ter hav ing been con­sis tent ly below it ever since 1942. Between 1939 and 1941, the rea l wage index d id not s ink below its 1939 level and one may, therefore, broadly say that , in the ve ry i n i t i a l pa r t of the period, the w o r k i n g classes in I n d i a as a whole d id no t suffer any i n ­road i n to the i r pre-war s tandard of l i fe . The average level a round w h i c h the a l l - I n d i a real wages fluctuated th roughou t the entire period Cell short of the 1939 level by nine points. Thus, on the whole, the gains in real wages made by workers in some States were more t h a n offset by the losses suffered by worke r s in other States w i t h the resul t t h a t the posi­t i o n by 1950 remained more or less on an even keel. The general pic­tu re o f rea l wage t rends In I n d i a

' Th is has been calculated by t a k i n g a weighted average of the various regional costs of l i v i n g series in each of the States covered, using the corresponding employment as weights .

@ This represents t o t a l employment in perennial factories under the Payment of Wages A c t 1936 in

the indus t r i a l groups included for ca lcu la t ing the money and real wage indices presented in the tab le . I t does not represent either the t o t a l employment in Ind ia under the Factories A c t or t o t a l Employmen t under the Payment of Wages Ac t . These la t te r figures w i l l be s l igh t ly higher.

as a whole appears to be one of a constant struggle on the par t of the w o r k i n g classes to keep close to the i r o r ig ina l posi t ion. For , a l though the a l l - I n d i a real wage index slump­ed to a low level of 70 in 1943, there­after, i t rose by gradual steps r i g h t up to 1949, by w h i c h year, as noted above^ i t jus t managed to reach its goa l .

The re la t ive ly smal l range of post­w a r var ia t ions in the cost of l i v i n g when seen in the context of the gra ­dual movement of post-war real wages towards their pre-war level, seems to point to the broad conclu­sion t h a t the re la t ive improvement in the economic condi t ion of the w o r k i n g classes in I n d i a as a whole has, in recent years, been achieved by a s i tua t ion combin ing w i t h i n i t price s t ab i l i ty and wage increase ra ther t han wage s t ab i l i ty and price decrease.

Contrary Movements of Profits and Wages

I t m a y now be in teres t ing to study the a l l - I n d i a real wage trends as g iven in Table N o . 3, in the context of those in the a l l - I n d i a indices of employment, money wages, indus­t r i a l product ion and i ndus t r i a l pro­f i t s , g iven i n Table No. 4 . I t w i l l be seen f r o m th is Table t h a t whi le output and employment reached the i r peaks in 1954 and indus t r i a l profi ts

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in 1948, real wages reached bo th the i r peaks and troughs much ear­l ier . This means tha t indus t ry was at its highest phase of cycl ical opera­t ion in 1945 but there was not much of a connection between the general i ndus t r i a l prosperi ty in the count ry and an improvement in the economic condi t ion of the w o r k i n g classes. A l ­though the a l l - I n d i a index of indus­t r i a l profits reached its peak of UGO in 1948, yet the index^ in 1945, stood f a i r l y h igh at 234, w h i c h was con­siderably more than twice its 1939 level. F r o m the standpoint of the re la t ion between the business cycle and cycl ica l var ia t ions of wages, th is seems to be a ra ther curious result unless these real wage peaks and troughs have fol lowed an earl ier business cycle in Ind ia . Ord ina r i l y , one should expect the peaks and t roughs of real wages to fo l low those of the business cycle. The posi t ion may be made more clear f r o m Table No. 4.

Table No. 4 shows t h a t d u r i n g the six years t h a t product ion rose, real wages rose w i t h i t in four years and fe l l in the other two . In the four years d u r i n g w h i c h the production index fe l l , real wages fe l l in two years and rose in the other two . This means t ha t out of the eleven years, output and real wages were posi t ively associated w i t h each other

T H E E C O N O M I C W E E K L Y A N N U A L . January, 1957

In six years bu t negat ively in four years. L e t us also look at the rela­t ion between real wages and indus­t r i a l profits. D u r i n g the six years t ha t profits rose, real wages rose w i t h them in t w o years and fe l l i n the other four whi le du r ing the f ive years t ha t profits fe l l , real wages rose in a l l the f ive years. I t i s th is confusing association between real wages on the one hand and indus­t r i a l output and profits on the other w h i c h p r i m a facie suggests t ha t i n ­dus t r i a l prosperi ty and an improve­ment in the economic lo t of the workers in I n d i a did not go hand in hand. In the years 1941 and 1943, indus t r i a l product ion rose by 8 and 6 points respectively but real wages fe l l by 6 and 22 points respectively. S imi la r ly , between 1944 and 1946, i ndus t r i a l profits declined by 10 points but real wages recorded a rise of 4 points. Immed ia t e ly after the close of the w a r in 1946, we have a strange s i tua t ion in w h i c h indus­t r i a l employment, output and profits a l l dropped not iceably bu t real wages rose noticeably. The rise in indus­t r i a l profits was quite rapid, espe­c ia l ly between 1939 and 1943, as w i l l be seen f r o m the fact that , by 1943, the profits index stood above its 1939 level by as much as 145 points. Real ' wages, on the other hand, de­ter iora ted progressively du r ing th is very period. W h i l e profits reached a near-peak level in 1943, real wages of workers reached the i r t rough in the same year.

Output Above and Wages Below 1939 Level

A closer look at the series of pro­duction, profits and real wages re­veals a very in teres t ing fact . W h i l e indus t r i a l output and prof i t s were consistently above the 1939 level throughout the entire period except only in 1947, real wages of w o r k e r s were below the 1939 level a lmost th roughout the whole period. These trends suggest the broad conclusion tha t , between 1939 and 1950, pros­per i ty in Ind i an indus t ry did not a t a l l reflect i tself in any tangible i m ­provement in the s tandard of l i fe of the workers but only in offer ing t h e m more employment. This raises the question: Was the indus t ry res­ponsible fo r th is paradoxical deterio­r a t i o n in the economic condit ion of the workers? In other words, d i d the I n d i a n entrepreneur increase th i s output and profits by pay ing rela­t i ve ly l o w wages to his workers? The movement of the a l l - I n d i a money wage index suggests tha t , as com­pared w i t h 1939, I n d i a n Indus t ry bet­ween 1939 a n d 1950, was pay ing i n ­

creasingly higher a n d h igher money wages f r o m year to year. The money wage index, i t w i l l be noticed, d id not recede even in a single year d u r i n g the twelve years f r o m 1939 to 1950. In other words, the w o r k i n g classes in I n d i a were able to s t r ike bargains w i t h the i r employers for re la t ive ly h igher and higher money wages especially f r o m 1947 onward , but were powerless to adjust the i r real wages by such bargains in v i ew of the tremendous rise in the cost of l i v i n g . A closer look at the re la t ive rise in the index numbers of profi ts and money wages w i l l serve to em­phasise tha t , t h o u g h money wages rose continuously, the rise was much less than the rise in profits for a m a j o r pa r t of the per iod f r o m 1939 to 1950. I t w i l l be seen t h a t bet­ween 1939 and 1946 the money wage index was consis tent ly f a r below the profi ts index, the highest gap of 89 points h a v i n g been recorded in 1942. A f t e r 1942 the gap between the two series was progressively na r rowed down, thus he lp ing the workers to improve the i r real wage posi t ion but i t was on ly f r o m 1947 onwards t h a t the money wage index overshot the profits index and by 1950 enabled the workers to regain the i r 1939 level of real wages. This c lear ly points to the conclusion t h a t the deteriora­t ion in the real wages of the I n d i a n w o r k i n g classes d u r i n g the major par t of the period under inves t iga t ion was the combined result of two fac­tors, viz the fa i lure of earnings of labour to keep pace w i t h the steep rise in the w o r k i n g class cost of l i v i n g on the one hand a n d the chro­nic gap upto 1947 between the earn­

ings of labour and the profits of indus t ry on the other.

A Summary

The broad conclusions w h i c h emerge f r o m the above s tudy are as fo l lows :

(1) Real wages of f ac to ry workers in I n d i a between 1939 and 1950, af ter an i n i t i a l rise, remained below the i r pre-war level p rac t ica l ly th roughout the period.

(2) I t was only towards the end of the period, namely, by 1949 and' 1950 t h a t they managed to regain the 1939 level.

(3) The average level a round w h i c h real wages of f ac to ry w o r k e r s in I n d i a as a whole fluctuated throughout the entire period fe l l short of the 1939 level by 9 points . I t was on ly af ter 1947 t h a t there was a persistent t r end for bo th money wages and real wages to rise steadily and t h a t the improvement in th is s tandard of l i fe of the w o r k ­ers af ter independence was achieved by price s t a b i l i t y and wage increase ra ther than wage s t a b i l i t y and price decrease,

(4) There was no direct associa­t ion between the trends of real wages on the one hand a n d those of i n ­dus t r i a l output and profi ts on the other, so t h a t one can say b road ly tha t , between 1939 and 1950, i n ­dus t r i a l prosperi ty a n d an improve­ment in the economic condit ions of the workers in I n d i a d i d no t pro­bably quite go hand in hand . On the other hand ( rea l wages of w o r k ­ers reached the i r lowest level In 1943 when profi ts were at the i r near-peak level.

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