Rise in income is not always good!!!

Hey Folks!

Hope you all are enjoying Monsoon, except for those who are in parts of the nation which is facing deluge due to torrential rain. I am always intrigued that when some part of the country is under drought yet at the same time others are inundated with the heavy rains. Even after seventy years of Independence we are living in the age of contrasts!

Anyways, today my topic of article is not concerned with it.  By reading the title of my article you may have intrigued and have thought I have gone mad! as we always crave for salary hike while we work, Isn’t it?  But wait, I guarantee you, if you will spend some time with me while reading this article; I will be able to persuade, if not convince, you on my point of view.

I am not going to talk you about philosophical aspect either, such as “Paisa to haath ki mail hai and all ”. Rather my explanation will be based on simple economics!

So before I should start, let me go some year back. I spent some of my crucial years in the capital of Heart of India( Madhya Pradesh), a beautiful state, with beautiful people. Though the overall time spent was memorable, but some of it was not so good.

Humans are prone to disease and illness is intrinsic to it, I had to spend some of my time in some private hospitals, not as a patient but as a caretaker to some of my friends and other close ones. During my stay I came across a striking reality that many of the sisters or nurses in the Hospitals were Keralites (originated from the Indian state of Kerala).

Later when I came to my home town, and when I had to visit some of the hospitals, here also the same phenomena was conspicuous, most of the nurses were from Kerala.

Then one more incident happened, when some of the Nurses were stuck in one of the middle east country and our Indian Embasy successfully airlifted them to India, then I came to know that Kerala is a land where majority of the Girl pursue their carrier in the field of Nursing and it is basically a hub of it.

Well, this was just a background. Now, coming to the real issue and towards the question why Salary Hike is not always good!!!

Recently, Nurses in Kerala had organized an indefinite strike. Their demand was that they are being paid very dismal salary. If you look towards their concern you would also sympathies with them. Majority of them were awarded salary below 13,000 and some even around sub 10,000.

So their demand was that their salary must be hiked and the minimum salary should be no less than 20,000. Since health care is a vital concern, the state government with some hiccups relented and their demand was agreed in principle. Nurses called off the strike.

But, but… this may not be the happy end. There is some elementary economics is involved around it which will suggest that the hike is salary is not good in long haul for the whole community of Nurses.

Let me put it in this way. The basic question is that why the salary of Nurses in Kerala is less as compared to another state? The reason is that there are enough nurses available in the market. Like any other commodity which may be abundance in market the value of that particular commodity will decrease or. Here the value is measured in monetary terms. This is  as same as the situation when very few people is having large options to choose. This is the exact case with the nurses.

Private hospitals find nurses very easily in Kerala and hence they keep them on minimum wages. Nurses, due to scarcity of other options or due to some constraints not willing to relocate, is able to work in that lower wages.

Now if the minimum salary will be raised to Rs 20,000, the Hospitals, which is mostly run by the private firms will find it difficult to pay to the Nurses, because their profit margin will reduce substantially. Hence what they will do is to start firing the nurses. Initially the task which was accomplished by the 10 nurses, they will fulfill the same task with 4-5 nurses.

Hence in turn due to rise in salary, those 4-5 nurses will ready to work extra as they will have an incentive to work, but for those who are fired for them the situation will be bleak. They will lose job and be bereft of the earning whatever they used to get earlier.

Hence the unemployment will rise and menace of unemployment will have its own cascading effect. The negative impact will not only limit to the unemployment. The quality of service will also bear the brunt due to stressed number of staff and patient will ultimately suffer.

Hence overall raising the salary will ultimately to be proved futile in larger extent. This concept in economics is known as “theory of demand and supply”. With the same manner we can understand why the price of any goods or commodity rises or fall.

Hope you would have got some idea about the topic in this tedious and boring article.

Thanks for reading!!!

Image Credit: Google.

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32 thoughts on “Rise in income is not always good!!!

  1. Always two sides of the coin…Same case here.

    Liked by 1 person

    1. Indeed! But a little nuanced one. Hope you have liked it. ☺️

      Liked by 1 person

  2. Yes and no .Yes because we need to see the earning power of hospitals and then move ahead as per the profitability. No we need to raise standard of the professionals like nurses who tire down to look after patients. .Avery good article.

    Liked by 1 person

    1. Aah! Economics is the study of balancing this yes and no. To maintain a trade off between conflicting situation.
      Thanks for reading.

      Like

    1. शुक्रिया 🙏

      Liked by 1 person

  3. This a very difficult situation!! Balance needs to be maintained but more important I suppose aim at maximum and proper employment needs to fulfilled following with incentives!!
    Finding a bit difficult to explain with lot in mind!!

    Liked by 1 person

    1. See! we find it difficult in one situation but imagine how difficult it would be for the government to handle all those conflicting situations, and many of us think “सरकार तो निक्कमी है” 😁

      Liked by 1 person

      1. Exactly!!! That’s why rather than pointing to government for not functioning adequately it’s better to understand the individual responsibility. Once to put your shoes in another person circumstances than you will understand the problem so it’s better to solve situations before the problem arises!!
        Matter of fact every post of government is full of fire!! Well raised topic!! Super

        Liked by 1 person

        1. शुक्रिया 😇

          Liked by 1 person

    2. By the way thanks for stopping by this article. 😊

      Liked by 1 person

  4. A well quoted example.
    And yeah shifting of demand and supply to either of extremities always have an adverse effect on the economy for attaining equilibrium is impossible.

    Liked by 1 person

    1. True Indeed, thanks for your opinion.

      Liked by 1 person

  5. Itne bade desh me bahut saari samasyaaye hain saath hi koyee bhi samashyaa kisi se kam nahi….sach hai ki kerala nurse ka hub hai jiske kaaran saste salary par we mil jaati hain…..jiska private hospital waale bharpur shoshan karte hain…..saath hi jab koyee bhi cheej baajaar me bhaari matra me ho to kimat kam milta hi hai….
    Higher the price lower the demand,
    Lower the price higher the demand.

    Liked by 1 person

    1. बिल्कुल सही मधुसूदन जी!

      Liked by 1 person

  6. True that. But do you feel that an individual will ever understand this ethical concept? No, we all (at least most of us) want our own development and don’t even try to know why this is being done!!
    You wrote exactly what was needed to be conveyed.👍

    Like

    1. You are absolutely correct Veronica. Even if I would have got an offer of a pay hike, I would surely loved to get it. 🙂 This tendency is same for every individuals.
      But these things has to be dealt in keeping the larger picture in mind and in economics that is termed as Macro Management and precisely done by the state or a firm.
      Its a complex phenomena, I tried to make it over simplified. Thanks for stopping over. 🙂

      Like

      1. Absolutely. We don’t even want to understand the concepts at macro level. But sooner or later, we have to.

        Yes, you wrote it really well! 👍😊

        Liked by 1 person

        1. Its always pleasure to see your response on my posts. Thanks once again. 🙂

          Like

  7. Yes, right .Every side has its pros and cons.Interesting post .Thanks for sharing and posting on social issue

    Liked by 1 person

    1. Thanks for reading and I am pleased that you liked it.

      Like

      1. Welcome abhay😊

        Like

  8. The article challenges both the Right and Left political ideologies on this very fundamental economic issue. Dilemma indeed!

    Liked by 1 person

    1. Indeed it’s dilemma! A challenge for policy makers! Economics is the study of Choices😊

      Liked by 1 person

  9. Hello! My name is Peter and have just started a blog called The Student Economist. Please feel free to have a read of my first publication, and I hope you’ll enjoy it! Feedback would be amazing and any comments are massively valued for myself. I will make sure to re-follow back your own blog! http://www.thestudenteconomist2017.wordpress.com

    Like

  10. A different way of approaching the matter.👏

    Liked by 1 person

    1. I just tried to explain the scenario from the economic point of view. Hope you would have liked it.

      Liked by 1 person

      1. Yes. Rarely do people think like this. It is the harsh reality.

        Liked by 1 person

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