With wage progression favouring younger workers, the sector will struggle to retain skilled, middle-level workers.

Worker protests across India’s industrial belts have again become a recurring feature of the economic landscape. The demands are rarely un-expected — a living wage, basic job security and some assurance that spending years on the factory floor will amount to something.

The protests appear to be triggered more by structural issues than by inflationary spike in energy prices or localised disputes over contract terms. In the manufacturing sector, the longer the workers stay, the less they are rewarded. The inversion of labour productivity/wage for low-and medium-skilled workers in their middle years is being hidden un-der the carpet in our zeal to employ the emerging youth population.

This is one of the more underappreciated vulnerabilities in India’s industrial economy, and is becoming harder to ignore. Per PLFS 2025 data, the average salaried manufacturing worker earns ₹18,735 per month, and a monthly income of ₹22,500 places a worker in the top 20 per cent of this group (PLFS, 2025). The bar for relative prosperity is seemingly very low. This is compounded by lack of written contracts (16.5 per cent workers), social security (20.4 per cent) or paid leave (21.1 per cent), and self-employed workers in manufacturing (44 per cent) who have none of these and earn less than the average manufacturing worker.

The wage statistics are worrisome when we cut across demographics. The 2025 PLFS report shows workers in the 15-18 age cohort in manufacturing earn above (₹9,900 per month) their cohort’s all-industry average(₹8,800), and enter the market with a competitive edge.

This advantage declines with age as manufacturing workers in their 40searn almost 20 per cent less (₹21,150) than their all-industry average(₹26,000). Ignoring the negligible real wage gain, a manufacturing worker with 20 plus years of experience earns a little more than twice of what a teenager earns.

Standard human capital theory is also ignored, as the sector seemingly treats older workers not as repositories of accumulated skill but as costs to be managed downwards.

Seniority not rewarded

The blame may not lie on any lack of demand for high-skilled manufacturing workers but rather on contract worker arrangements. By design, contract workers are not necessarily rewarded for seniority, they have no increment by tenure or pathway to permanence, allowing contractors to suppress wage growth over time.

The Annual Survey of Industries (ASI) 2023-24 report shows the share of workers employed through contractors steadily increasing from 38 percent to 42 per cent over the last five years. Older workers are also more likely to be displaced by younger cohorts who are cheaper to employ, without adversely troubling the needle of output or productivity for the employer.

In the new post-pandemic era of global fragility and national uncertainty, where input cost shocks are likely to occur with greater frequency, a manufacturing worker cannot accumulate purchasing power over the most productive years of their life, giving rise to a workforce epermanently close to the edge. A single health shock is likely to com-press household budgets even further.

The all-India PLFS numbers also inherently show inter-State labour mi-gration is no magical escape route, but simply an age-old means of leaving villages and towns bereft of opportunities.

These findings should similarly warn young workers entering manufacturing at competitive wages only to gradually discover the sector offers little upward trajectory. Without adequate skilling, either self-motivated or institutionalised, they will soon be earning less in relative terms, than when they started. The demographic dividend may be achieved butat a higher cost for the next generations to come.

The new Labour Codes, especially the Industrial Relations and the Code on Wages, can enforce hard lines in contractual arrangements to avoid more casualisation of the workforce.

The national floor wage requires periodical revision to arrest wage sup-pression at lower ends of the distribution. Industrial policies can also incorporate wage progression benchmarks as explicit conditionalities, ensuring it reaches sector-specific workers who need it the most. State-level framing of the Codes will also become more critical to the success of such worker protection measures in due course.

Manufacturing is not a peripheral concern in India’s growth story. With agriculture shedding surplus labour and services unable to absorb workers into ‘good jobs’, it remains a singularly important pathway to employment for India’s low- and medium-skilled workforce.

A manufacturing sector that rewards youth and punishes experience will struggle to retain skilled workers in the decades to come, and erupt in more social friction spilling across both organised and unorganised sectors. Manufacturing-led growth requires a strong domestic consumption base, and one that needs to feel the implicit bargain of industrial employment is being honoured.

The writer is Associate Fellow at the National Council for Applied Economic Research, New Delhi. View are personal.