16 December 2024

Low Salaries: Law Of Demand And Supply

The internet has many posts criticising the low salaries for:
1. Assistant Professors (like ₹ 35,000/month) in many colleges and universities
2. Fresh engineers (like ₹ 3 lakh/year) in companies like TCS, Wipro and Infosys

Wage is the price of labour. And the most fundamental law of economics is that all prices are decided by demand and supply. High demand or/and low supply leads to a high price/wage. And low demand or/and high supply leads to a low price/wage. Low salaries for Assistant Professors and fresh engineers are simply a reflection of the high supply of these workers.

The average wage of a casual labourer (like farm workers and construction workers) in India is ₹ 400/day. So if a farm/construction worker works 30 days a month, he/she will earn only ₹ 12,000/month - for doing back-breaking work in the hot sun the whole day. Is this fair? Of course, it is not. But the world does not run on fairness - it runs on the laws of economics, especially the law of demand and supply . . .

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