The World Bank’s Ease of Doing Business report released on Tuesday shows that a cashier in a Delhi supermarket is entitled to a monthly minimum wage of $217.6 a month, which translates to over Rs 14,000 at current exchange rates. This works out to be over 60% higher than the Rs 8,650 a month that a similar worker with a year’s experience will earn in Mumbai.
The Bank’s analysis is based on a survey that compared the earnings and working conditions of 19-year-old cashiers in supermarkets that employ 60 workers across 190 countries. Delhi and Mumbai were the two cities surveyed in India.
For a worker, higher wages will compensate for more working days. Number of annual paid leaves in Mumbai were 21 and 15 in Delhi. But from the supermarket’s point of view, the ratio of the cashier’s minimum monthly wage to the value addition per worker was more favourable in Mumbai. Going by the World Bank’s calculations, the value addition by a worker in the Capital is roughly equal to the minimum wage, whereas in Mumbai wage is only 60% of the value added.
It’s a different matter that the minimum wages in Mumbai seem to be much lower than those in several developing countries, such as Mexico City ($152), Vietnam ($168) and Kuwait ($199).
At the same time, Delhi is more expensive than Bangkok, Shanghai, Jakarta, Kuala Lumpur or even Manila.
In several labour-intensive industries such as textiles or leather, wages often play a crucial role in deciding where a company will locate its manufacturing facility.
In fact, the recent rise in wages in China is seen to be driving companies that operate large factories to other countries in the region such as Vietnam, Cambodia and even India.
But wage cost is not the sole criteria. Quality of manpower, working conditions, the impact of unions and productivity are equally important, if not more.