Labour productivity at multi-year low

Chennai: Labour productivity growth in organised manufacturing sector has dropped to multi-year lows. India Ratings and Research’s analysis of data of Annual Survey of Industries (ASI) indicates a slowdown in labour productivity growth in the Indian organised manufacturing sector.

As per the data, labour productivity grew at an average annual rate of 3.7 per cent during the financial year 2016-2018. In the financial year 2017, labour productivity growth fell to 2.6 per cent and 2.9 per cent in FY18.

Labour productivity had been growing by 9.6 per cent in FY01-06 and had peaked at 14.2 per cent between FY04-FY08. It grew by 10.3 per cent between FY06 and FY10. However between FY11 and FY15, it slowed down to 7.4 per cent.

According to Ind-Ra, longer and sustainable labour productivity gro-wth is dependent on in-vestments in innovation, knowledge, and intangible capital by businesses. It is also dependent on governments’ commitments towards structural reforms.

Further, average monthly wage of a worker in the organised manufacturing sector rose to `12,405 during FY16-18 from `4,006 during FY01-FY05. However, the wage growth has slowed down lately.

The average wage growth has been 6.5 per cent over FY16-FY18 as compared to 11.7 per cent and 8.1 per cent during FY11-FY15 and FY05-FY10, respectively.