The latest annual survey of industries (ASI) data for FY12 should serve as a wake-up call for trade unions as well as politicians that provide them support by refusing to make it easier for firms to fire labour. It confirms the trend of increasing mechanisation—higher output growth without a parallel increase in the number of workers. While the total value of output grew by 25.3% in FY11 and 23.5% in FY12, the total number of workers increased by 8.1% in FY11 and 5.4% in FY12—salaries, though, grew by 24.2% in FY11 and 16.6% in FY12. Compare this with the year preceding the global financial crisis—the total value of output rose 26.2% in FY07, the number of workers 10.4% and wages 17.6%.
Some part of the shift is unavoidable and is related to quality—robots to do welding ensures more uniform quality. A large part, however, has to do with rising wages, labour shortages and, related to that, labour stridency, even militancy. Since no political party is likely to reform the Industrial Disputes Act—at least going by the manifestos—labour’s best bet is in the changes to the Apprentice Act being promised. Once this is done, companies will find it easier to hire untrained persons and train them on the job without the headache of them becoming full-time employees.