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.