The growth in labour productivity and real incomes is not happening “as fast as people’s aspirations”, which has led to them “queuing for government jobs”, NITI Aayog Vice Chairperson Suman Bery said on Thursday. In his remarks at a Confederation of Indian Industry (CII) summit, Bery noted the real challenge facing India is raising productivity in both manufacturing and services, and urged the private sector to create “better jobs”.
“A particular dimension of Viksit Bharat is the urgency of raising labour productivity. This is very much an area where the private sector has an important role to play,” Bery, who also chairs the Economic Advisory Council to the Prime Minister (EAC-PM), said.
Bery observed India’s GDP in purchasing power parity (PPP) terms stood at $15 trillion, compared with $29 trillion for the United States. Highlighting the difference in labour productivity in the two countries, Bery said, “We’re roughly half the size of the US economy. Our labour force currently is approximately three times the size of the US labour force.”
The eminent economist said rising productivity leads to faster growth in real incomes and improved standards of living. “The fact that that has not been happening as fast as people’s aspirations is what is leading to (them) queuing for government jobs, etc. What is really important is that those better jobs be generated by the private sector,” Bery said.
The Economic Survey 2024-25 said real monthly wages for both male and female salaried and self-employed workers in 2023-24 were lower than pre-pandemic levels in 2017-18. It also noted that while corporate profitability soared to a 15-year high in 2023-24, growth in wages has “lagged”.
Bery noted that advanced economies such as the UK and Canada are also “concerned about stagnant productivity”.
“India’s track record has not been bad in terms of growth of productivity, but it needs to get better. Our problem is our lower level, not only with respect to the US but also with respect to some of our peers, such as China and others in ASEAN. And certainly, in G20, our labour productivity is the lowest,” he said.
The NITI Aayog vice chairman emphasised focusing on underutilised labour to boost productivity. “Faster growth is if we can deploy more of our underutilised labour, particularly women and youth, in more productive activities,” Bery said.
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