ANNUAL SURVEY OF INDUSTRIES 2003-04 (PART I & PART II)
LABOUR COST
Labour cost is one of the most significant factors for studying the economic viability of any industrial activity for an entrepreneur before venturing into the industrial field. It helps in studying the extent of expenditure incurred by entrepreneurs on labour welfare and social security aspects, in addition to wages/salaries paid to them. In addition to it, it also helps in (a) reliable costing, (b) wage fixation on a realistic basis, (c) logical collective bargaining, (d) evolving implementation and evaluation of welfare measures, (e) study of trends over a period of time, (f) location of industry and the like. Labour Cost data are also important for policy formulation at the national and regional levels. With this end in view, data on various aspects of labour cost are collected every year which, inter-alia, include the expenses incurred by the industrial establishments on wages/salaries to their employees, bonus (profit sharing bonus, festival bonus, etc.), contributions to provident and other funds, and workmen and staff welfare expenses in respect of all employees employed directly or through contractors. The aggregate of these components gives the labour cost. When used in conjunction with the number of mandays worked, this gives the average labour cost per manday worked.
5.1 Average Labour Cost
State-wise and Industry-wise data on average Labour Cost per manday worked for all employees during the year 2003-04 are given in Tables 5.1.1 and 5.1.2, respectively. The Tables reveal that at the all India level, the average labour cost per manday worked in respect of all employees was recorded at Rs. 305.89. Out of this amount, the employers, on the average, spent Rs. 233.71 on wages/salaries of their employees, Rs. 12.58 on bonus, Rs. 37.08 as the contribution towards the employees’ provident fund and other funds and Rs. 22.52 as workmen and staff welfare expenses for each manday worked by an average employee. The average labour cost per manday worked in Public Sector manufacturing industries was Rs. 660.61 as against Rs. 578.01 in Joint Sector and Rs. 268.37 in Private Sector manufacturing industries.
5.2 Average Labour Cost by States
Table 5.1.1 reveals that the highest average labour cost per manday worked in respect of all employees was reported at Rs. 590.59 in Jharkhand, followed by Rs. 559.46 in Chhattisgarh and Rs. 455.87 in Uttaranchal, all the three States being newly created states. The lowest average labour cost per manday worked in respect of all employees was reported at Rs. 72.55 in Manipur, followed by Rs. 90.88 in Nagaland, Rs. 102.16 in Tripura and Rs. 153.97 in Meghalaya, all the four States belonging to North-Eastern region of the country.
Among the high employment generating States, Andhra Pradesh recorded the lowest average labour cost per manday worked at Rs. 193.60.
5.3 Average Labour Cost by Industries
Analysis of Table 5.1.2 shows that the highest average labour cost per manday worked was reported at Rs. 988.48 in the industry group ‘353-Manufacture of aircraft and spacecraft’, followed by industry groups ‘232-Manufacture of refined petroleum products’ (Rs. 934.70), ‘341-Manufacture of motor vehicle’ (Rs. 928.46), ‘322-Manufature of television and radio transmitters and apparatus for line telephony and line telegraphy’ (Rs. 702.29) and ‘311-Manufacture of electric motors, generators and transformers’ (Rs. 677.26). The lowest average labour cost per manday worked was reported at Rs. 81.18 in industry group ‘160-Manufacture of the tobacco products’, followed by industry groups ‘014-Agricultural and animal husbandry service activities, except veterinary activities’ (Rs. 96.37) and ‘201-Saw milling and planning of wood’ (Rs. 102.04). The industry group ‘160-Manufacture of the tobacco products’ is one of the high employment generating industry, which has recorded the lowest average labour cost.
5.4 Percentage of Components of Labour Cost
State-wise and Industry-wise detailed analysis of percentage of various components of labour cost on employee, viz., (i) wages/salaries; (ii) bonus; (iii) contribution to provident and other funds, and (iv) workmen and staff welfare expenses, to total labour cost on employee has been depicted in Tables 5.2.1 and 5.2.2, respectively.
At the all India level, the percentage shares of different components of labour cost to total labour cost were 76.40 per cent on wages/salaries, 4.11 per cent on bonus, 12.12 per cent on provident and other funds and remaining 7.36 per cent towards staff welfare expenses.
Among States, the share of wages/salaries in the labour cost was highest at 95.57 per cent in Manipur, followed by Nagaland (90.25 per cent). The share of wages/salaries in the labour cost was lowest at 56.89 per cent in Himachal Pradesh, followed by 64.25 per cent in Andaman & Nicobar Islands. For majority of the States/Union Territories, the share of wages/salaries in the labour cost was between 70 to 80 per cent.
As regards payment of bonus, its percentage contribution to total labour cost was 6 per cent or more in Dadra & Nagar Haveli, Daman & Diu, Pondicherry and Kerala, and less than 2 per cent in Manipur, Orissa, Chhattisgarh and Andaman & Nicobar Islands. The contribution to provident and other funds in total labour cost was the highest at 31.04 per cent in Andaman & Nicobar Islands and the lowest at 1.72 per cent in Manipur. The highest percentage of staff welfare expenses as component of labour cost was reported at 32.71 per cent in Himachal Pradesh and lowest at 1.47 per cent in Manipur.
Among majority of the industry groups, the percentage of salaries/wages to total labour cost was recorded between 70 to 80 per cent. Two industry groups, viz., ‘014-Agrticultural and animal husbandry service activities, except veterinary activities’ and ‘372-Recytcling of non-metal waste and scrap’, recorded more than 90 per cent salaries/wages to total labour cost. Four industry groups, viz., ‘243-Manufacture of man-made fibers’, ‘311-Manufacture of electric motors, generators and transformers’, ‘315-Manufacture of electric lamps and lighting equipment’ and ‘322-Manufacture of television and radio transmitters and apparatus for line telephony and line telegraphy’, recorded less than 70 per cent salaries/wages to total labour cost.
The percentage contribution of bonus in the total labour cost was highest at 7.41 per cent in industry group ‘191-Tanning and dressing of leather, manufacture of luggage handbags, saddlery & harness’ and lowest at 1.75 per cent in industry group ‘271-Manufacture of basic iron and steel’. The percentage contribution of provident and other funds to total labour cost was highest at 23.85 per cent in industry group ‘315–Manufacture of electric lamps and lighting equipment’ and lowest at 2.86 per cent in industry group ‘372-Recycling of non-metal waste and scrap’. The percentage share of staff welfare expenses in total labour cost was highest at 14.95 per cent in industry group ‘232-Manufacture of refined petroleum products’ and lowest at 1.38 per cent in industry group '014-Agricultural and animal husbandry services activities, except veterinary activities’.
5.5 Percentage of Labour Cost to Total Cost of Production
Labour cost is one of the main components of the total cost of production in any industrial establishment. The percentage of labour cost on employees to total cost of production indicates the share of the labour in an economy in a country. In the changing scenario of world economy in terms of liberalization, privatization, globalization and modernization, the percentage share of labour cost to total cost of production is bound to change over a period of time. The time series data on the percentage of labour cost to total cost of production may be of immense use in overall economic planning of labour policies and programmes. With this end in view, State-wise and Industry-wise data on percentage share of labour cost to total cost of production in different sectors have been presented in Tables 5.3.1 and 5.3.2, respectively.
The Table 5.3.1 reveals that at all India level, labour cost constituted 6.82 per cent of the total cost of production during the year 2003-04. The percentage of labour cost to total cost of production was 10.71 per cent in Public Sector, 6.67 per cent in Joint Sector and 6.48 per cent in Private Sector manufacturing industries.
Among States, the highest percentage of labour cost on employees to total cost of production was reported in Manipur at 13.43 per cent, followed by Jharkhand at 13.13 per cent, Chhattishgarh at 11.75 per cent, Tripura at 11.11 per cent, and Chandigarh and West Bengal at 10.55 per cent each. On the other hand, the lowest percentage of labour cost to total cost of production was reported at 2.10 per cent in Dadra and Nagar Haveli. The percentage of labour cost to total cost of production was reported to be between 3 and 4 per cent for States/Union Territories of Andaman & Nicobar Islands, Meghalaya, Dadra & Nagar Haveli and Bihar. The percentage of labour cost to total cost of production was reported to be more than 10 per cent in 8 States/Union Territories, viz., Chandigarh, Uttaranchal, Manipur, Tripura, West Bengal, Jharkhand, Orissa and Chhattisgarh.
In major employment generating States, the percentage of labour cost to total cost of production was reported to be highest at 7.95 per cent in Maharashtra, followed by Tamil Nadu (7.73 per cent) and Andhra Pradesh (7.26 per cent), whereas, it was lowest at 4.04 per cent in Gujarat, followed by Uttar Pradesh at 5.71 per cent.
In Public Sector, the percentage of labour cost to total cost of production was more than 10 per cent in majority of 19 States/UTs, whereas it was less than 5 per cent in only 3 States/UTs. In Joint Sector also the scenario was more or less similar to that in Public Sector, wherein the percentage of labour cost was recorded to be more than 10 per cent in majority of 16 States/UTs, whereas it was less than 5 per cent in only 8 States/UTs. In Private Sector, the percentage of labour cost was recorded between 5 to 10 per cent in majority of 19 States/UTs, whereas it was less than 5 per cent in 9 States/UTs and more than 10 per cent in only 3 States/UTs. It is seen that the percentage of labour cost to total cost of production was on the higher side in Public and Joint Sectors, whereas it was on the lower side in Private Sector establishments in majority of the States/UTs.
Industry-wise and Sector-wise percentage of labour cost to total cost of production is presented in Table 5.3.2. The percentage of labour cost to total cost of production was recorded to be highest at 36.57 per cent in industry group ‘142-Mining and quarrying, n.e.c.’, followed by industry group ‘353-Manufacture of aircraft and spacecraft’ (34.75 per cent) and the lowest at 1.05 per cent in industry group ‘232-Manufacture of refined petroleum products’, followed by industry groups ‘151-Production, processing & preservation of meat, fish, fruit, vegetables, oils and fats’ (1.64 per cent) and ‘014-Agriculture and animal husbandry service activities, except veterinary activities’ (1.86 per cent). The percentage of labour cost to total cost of production was recorded more than 30 per cent in only two industry groups, between 10 to 20 per cent in 24 industry groups, between 5 to 10 per cent in 27 industry groups, whereas it was less than 5 per cent in 10 industry groups.
In major employment generating industry groups, the percentage of labour cost to total cost of production was reported to be highest at 14.03 per cent in industry group ‘160-Manufacture of the tobacco products’, followed by industry groups ‘181-Manufacture of wearing apparel, except fur apparel’ (13.01 per cent) and ‘171-Spining, weaving and finishing of textiles’ (9.68 per cent), whereas, it was lowest at 7.01 per cent in industry group ‘271-Manufacture of basic iron & steel’.
In Public Sector, the percentage of labour cost to total cost of production was more than 20 per cent in majority of 34 industry groups, whereas it was less than 5 per cent in only two industry groups. In Joint Sector also the scenario was more or less similar to that in Public Sector, wherein the percentage of labour cost was recorded to be more than 20 per cent in 24 industry groups, whereas it was less than 5 per cent in only 6 industry groups. In Private Sector, the percentage of labour cost was recorded between 5 to 10 per cent in 30 industry groups, whereas it was less than 5 per cent in 12 industry groups and more than 20 per cent in only one industry group. It is seen that the percentage of labour cost to total cost of production was on the higher side in Public and Joint Sectors, whereas it was on the lower side in Private Sector establishments in majority of the industry groups.
5.6 Wages/Salaries
State-wise and Industry-wise statistics on wages/salaries per manday worked are presented in Tables 5.4.1 and 5.4.2, respectively. The Tables reveal that at all India level, the wages/salaries per manday worked were Rs. 207.72 for men, Rs. 87.33 for women, Rs. 51.57 for child workers, Rs. 100.96 for contract workers, Rs.165.55 for all workers and Rs. 233.71 for all employees taken together. The wages/salaries per manday worked for all employees was highest at Rs. 488.59 in Public Sector, followed by Rs. 403.94 in Joint Sector and Rs. 208.25 in Private Sector. Two States/Union Territories, wherein wages/salaries paid to its employees was more than Rs. 400, are Jharkhand (Rs. 480.00) and Chhattisgarh (Rs. 449.37). Both these States, are newly formed States in the country.
The highest wages/salaries per manday worked to all workers was also reported in Jharkhand at Rs. 429.63, followed by Uttaranchal at Rs. 270.26 and Maharashtra at Rs. 228.81. Among male workers, the highest wages/salaries per manday worked was reported at Rs. 487.99 in Jharkhand and the lowest at Rs. 72.05 in Manipur. Among women workers, the highest and lowest wages/salaries per manday worked was reported at Rs. 339.07 in Uttaranchal and Rs. 50.40 in Nagaland, respectively. Out of the States where children were employed, the wages/salaries per manday worked was reported to be highest at Rs. 269.76 in Bihar and lowest at Rs. 25.00 in Assam. For contract workers, wages/salaries per manday worked was recorded to be highest at Rs. 208.21 in Andaman & Nicobar Islands and lowest at Rs. 53.06 in Nagaland.
It is further observed that the wages/salaries per manday worked was recorded more or less the lowest in the North-Eastern States/Union Territories for all categories of employees.
Under the category of directly employed workers, the wages/salaries per mandays worked of women workers was recorded to be more than that of their male counterpart in 4 States/Union Territories, viz., Chandigarh, Uttaranchal, Meghalaya and Andaman & Nicobar Islands.
Among Industries, the highest wages/salaries paid per manday worked to all workers was reported at Rs. 653.18 in industry group ‘353–Manufacture of aircraft and spacecraft’, followed by industry groups ‘232-Manufacture of refined petroleum products’ (Rs. 499.69) and ‘341-Manufacture of motor vehicles’ (Rs. 477.89), whereas it was lowest at Rs. 57.35 in industry group ‘160-Manufacture of the tobacco products’, followed by industry groups ‘201-Saw milling and planing of wood’ (Rs. 76.01) and ‘014-Agricultural and animal husbandry service activities, except veterinary activities’ (Rs. 79.75).
The highest wages/salaries paid per manday worked to women workers was reported at Rs. 774.69 in industry group ‘232-Manufacture of refined petroleum products’, followed by industry groups ‘353–Manufacture of aircraft and spacecraft’ (Rs. 550.59) and ‘341-Manufacture of motor vehicles’ (Rs. 440.21), whereas it was lowest at Rs. 42.97 in industry group ‘142-Mining and quarrying, n.e.c.’, followed by industry groups ‘201-Saw milling and planing of wood’ (Rs. 48.21), ‘372-Recycling of non-metal waste and scrap’ (Rs. 48.88), ‘160-Manufacture of the tobacco products’ (Rs. 52.25) and ‘153-Manufacture of grain mill products, starches and starch products, and prepared animal feeds’ (Rs. 59.00).
The average wages/salaries paid per mandays worked to women workers was higher than that of their male counterpart in 2 industries groups, viz., ‘232-Manufacture of refined petroleum products’ and ‘271-Manufacture of basic iron and steel’.
5.7 Average Daily Earnings
The average daily earnings have been defined as the wages/salaries per manday paid for. State-wise and industry-wise statistics on average daily earnings of workers during the year 2003-04 are presented in Tables 5.5.1 and 5.5.2, respectively. The Tables show that at all India level, the average daily earnings were recorded as Rs. 186.39 by men, Rs. 81.02 by women, Rs. 50.40 by children, Rs. 99.67 by contract workers, Rs. 152.61 by all workers and Rs. 211.08 by all employees. At all India level, the average daily earnings by workers were reported at Rs. 333.29 in Public Sector, Rs. 281.62 in Joint Sector and Rs. 135.19 in Private Sector manufacturing establishments.
For male workers, the amount of average daily earnings was reported highest at Rs. 466.46 in Jharkhand and lowest at Rs. 72.05 in Manipur. The average daily earnings were highest at Rs. 276.76 for women workers in Uttaranchal and at Rs. 259.14 for child workers in Bihar. The average daily earnings of women workers was reported to be lowest at Rs. 50.40 in Nagaland, followed by Manipur (Rs. 51.12). Among all the State/Union Territories, the average daily earnings by contract workers were reported to be highest at Rs. 166.65 in Andaman & Nicobar Island, followed by Goa (Rs. 163.82) and Kerala (Rs. 133.61) and lowest at Rs. 52.75 in Nagaland, followed by Manipur (Rs. 59.85) and Tripura (Rs. 60.94).
It is further observed that the average daily earnings were recorded more or less the lowest in the North-Eastern States/Union Territories for all categories of employees.
At the industry level, the highest average daily earnings for all workers was reported at Rs. 549.38 in industry group ‘353-Manufacture of aircraft and spacecraft’ and lowest at Rs. 55.43 in industry group ‘160-Manufacture of the tobacco products’. For contract workers, the highest average daily earnings was also reported at Rs. 273.34 in industry group ‘353-Manufacture of aircraft and spacecraft’ and lowest at Rs. 43.77 in industry group ‘160-Manufacture of the tobacco products’. For women workers, however, the highest average daily earnings was reported at Rs. 683.84 in the industry group ‘232-Manufacture of refined petroleum products’ and the lowest in industry group ‘142-Mining and quarrying, n.e.c.’ (Rs. 42.92).
The average daily earnings of women workers was higher than that of their male counterpart in 2 industries groups, viz., ‘232-Manufacture of refined petroleum products’ and ‘271-Manufacture of basic iron and steel’.
Average daily earnings for other category of employees by State and industry have been presented in Tables 5.6.1 and 5.6.2, respectively. At all India level, the average daily earnings were Rs. 578.98 for supervisory & managerial staff, Rs. 251.39 for other staff as compared to Rs. 168.21 for directly employed workers, Rs. 99.67 for contract workers, Rs. 152.61 for all workers and Rs. 211.08 for all employees.
For supervisory and managerial staff, the average daily earnings was highest at Rs. 947.59 in Public Sector, followed by Joint Sector (Rs. 721.54) and Private Sector (Rs. 538.52). At the State level, the highest and lowest average daily earnings for supervisory and managerial staff were reported at Rs. 1410.56 in Chhatisgarh and Rs. 125.29 in Manipur, respectively.
For other staff, the average earnings was reported at Rs. 429.62 in Public Sector, followed by Joint Sector (Rs. 333.68) and Private Sector (Rs. 230.16). At State level, the highest and lowest average daily earnings for other staff were reported at Rs. 586.06 in Jharkhand and Rs. 103.72 in Manipur, respectively.
For the directly employed workers, the highest and lowest average daily earnings were again reported at Rs. 457.86 in Jharkhand and Rs. 64.80 in Manipur, respectively.
For all categories of employees, except contract workers and supervisory a& managerial staff, the average daily earnings was highest in the State of Jharkhand.
For all categories of employees, the highest average daily earnings were reported in Public Sector, followed by Joint Sector and Private Sector.
At the industry level, the highest average daily earnings for all categories of employees, except directly employed workers, were reported in the industry group ‘353-Manufacture of aircraft and spacecraft’ at the rate of Rs. 273.34 for contract workers, 549.38 for all workers, 1378.22 for supervisory and managerial staff, Rs. 641.34 for other staff and Rs. 694.40 for all employees. For directly employed workers, the highest average daily earnings was reported at Rs. 640.13 in the industry group ‘232-Manufacture of refined petroleum products’, followed by industry group ‘353-Manufacture of aircraft and spacecraft’ (Rs. 555.66). The lowest average daily earnings for directly employed workers, supervisory and managerial staff and other staff were reported at Rs. 69.11 in industry group ‘372-Recycling of non-metal waste and scrap’, Rs. 121.64 in industry group ‘201-Saw milling and planing of wood’ and Rs. 83.38 in industry group ‘192-Manufacture of footwear’, respectively. The lowest average daily earnings for contract workers, all workers and all employees were reported in the industry group ‘160-Manufacture of the tobacco products’ at the rate of Rs. 43.77, Rs. 55.43 and Rs. 64.43, respectively.
5.8 Percentage of Factories paying/incurring Expenses on Bonus, Provident Funds and Welfare Funds.
State-wise and industries-wise data on percentage of factories paying/incurring expenses on bonus, provident funds and welfare funds are given in Tables 5.7.1 and 5.7.2, respectively. The Tables reveal that at the all India level, the percentage of factories incurring expenditure on bonus, provident funds and welfare funds was recorded at 68.74 per cent, 71.40 per cent and 71.51 per cent, respectively. The percentage of factories paying bonus was recorded at 61.21 per cent in Public Sector, 67.55 per cent in Joint Sector and 68.84 per cent in Private Sector. The percentage of factories contributing towards the provident and other funds was recorded at 84.21 per cent in Public Sector, 84.89 per cent in Joint Sector and 71.07 per cent in Private Sector. The percentage of factories incurring expenditure on welfare of their workers was recorded at 82.50 per cent in Public Sector, 77.86 per cent in Joint Sector and 71.29 per cent Private Sector.
At the State level, the percentage of factories paying bonus to its workers was recorded lowest at 14.68 per cent in Nagaland, followed by 18.92 per cent in Manipur. The percentage of factories contributing to the provident and other funds was recorded lowest at 8.11 per cent in Manipur, followed by 12.84 per cent in Nagaland. Similarly, the percentage of factories incurring expenditure on welfare of its workers was lowest at 41.07 per cent in Andhara Pradesh, followed by 45.08 per cent in Chhattisgarh and 45.95 per cent in Manipur.
Analysis of Table 5.7.2 shows that the percentage of factories incurring expenses on bonus, provident funds and staff welfare was lowest at 25.81 per cent in industry group ‘372-Reclying of non-metal waste and scrap’, 34.88 per cent in industry group ‘201-Saw milling and planing of wood’ and 36.27 per cent in industry group ‘153-Manufacture of grain milk products, starches and starch products and prepared animal feeds’ respectively.