Huge wage inequalities create difficulties – Mukesh Ambani

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https://twitter.com/joshreef/status/676079690336063488

At the present time, the world has executives of large companies and banks that have salaries in millions while there are also armies of workers trying to manage with starvation or near starvation wages. Such huge wage inequalities are more common in some countries than in others. It seems that in US, many workers on a full time job cannot manage without additional social help. The problem is not confined to a highly developed country like the US but it also extends into re-emerging economies such as India.

Countries with huge wage inequalities lead to societies that are neither humane nor happy. They also tend to promote crime and poor living conditions in cities for all. Therefore the unhappiness is not confined just to the low wage earners but also extends into the lives of the wealthy. Further, the Universe has ways to ensure that whatever we spread around tends to return to us if it be joy or if it be sorrow.

It is quite clear that controlling huge wage inequalities cannot be left to market forces alone. Governments have a role to play in controlling huge wealth and income inequalities; what sort of control a government may impose is another matter. A method that has been tried at various times is to control high wages through salary caps or high tax rates. A common method for controlling low wages is to prescribe minimum wages. Such controls are only partially successful because they also create other problems. For example some new businesses would not be able to take off unless allowed to start with very low wages. Similarly a struggling business is at times able to survive a lean period by cutting down wages for all. An alternative scheme that prima-facie seems attractive is the rule of ten; it has been described elsewhere by this author. It prescribes a ratio of maximum to minimum salary that each organization must maintain. This rule leads to an automatic control of both very high compensations as well as very low ones within each organization, each according to its capacity and planning within the overall constraint of a prescribed ratio. For more details of it see here: http://someitemshave.blogspot.in/2012/02/the-rule-of-ten-way-to-strengthen.html

A general note on rising income inequalities in world in this blog is here:
http://steamcenter.blogspot.in/2015/01/era-of-inequality-since1978-causes-and.html

The author’s mind returned to the present issue today after a visit to a retail chain store in Jaipur that is perhaps owned by a company controlled by the wealthiest person in India – Shri Mukesh Ambani. Our world is full of beautiful buildings and when I heard that Shri Mukesh Ambani has built one of the most expensive homes in the world for himself in Bombay, I searched for a picture. Bombay has some of the most beautiful historical buildings of the world dating to colonial times and I expected to see a new modern addition to the beauty of the city. A quick google search led to a picture of the building. I must say I was disappointed (top image). To me it seemed that the building was devoid of beauty. The home is a high-rise building but these can be extremely beautiful too as for example the one in the pictures below.  I wondered how this might have happened but whatever the reason, at the root of lack of beauty in human lives and their doing is some other difficulty in other areas of life, for beauty too is one of the essentials like love and truth that leads humans to a higher state of being. I wondered what this might be and I think I might have found the answer today in the trip to the store in Jaipur. The store is run by Reliance Retail Ltd a subsidiary company of Reliance Industries of which the largest shareholders are the Ambani Family.

https://pixabay.com/en/thailand-bangkok-city-high-rise-345514/
I have been afraid to go to a Reliance stores recently because they seem to lack staff and the ones that remain seem unhappy and uncooperative as compared to another chain store called Easy day. Most workers of the reliance store seemed to have left. Nevertheless, I visited the store because their products are good and a few are not found in other stores as easily. However the picture was even worse this time, the aisles as well as the cash counters were devoid of staff. I learned that most had left because of low wages and bad working conditions. Some discreet enquiries later, I learned the following.

The staff on cash counters and aisles gets Rupees five thousand a month which is half of what an unskilled, illiterate worker gets in the same city doing work on construction sites. It is also less than what domestic servants in the city get who also get free food and lodgings besides. The working hours were longer seems 9 to 6 or more instead of 9 to 5 for construction labor in the same city. While construction workers get full one hour lunch from 1 to 2 there was no fixed or scheduled time for lunch here. Further while construction workers got overtime for work beyond regular hours at double the hourly rate there it seems there was none such at the reliance stores. Neither did it seem there were any annual increments, annual leave etc. at this store. This information was gathered by casual talk, if the company shall advise me as a comment to this note of some inaccuracy in it, I shall gladly make the change as an update to this post. My rough estimate was that if the salary of the ten or so workers is doubled at this store it would lead to an increase of operating costs of less than one percent of sales i.e. it would result in a one percent reduction in profit or a similar increase in cost of products perhaps. However it may not because business volume is bound to increase when the staff is happier and therefore more helpful.

High CEO compensations and low worker wages are leading to increasing inequalities in the world. While the rich are getting richer the rest are getting poorer. According to Oxfam less that hundred billionaires in the world now own a wealth equal to half of the rest in the world. New political movements and leaders are emerging that are promising a change such as Narendra Modi of India, Bernie Sanders in US and Jeremy Corbyn in UK and it may not be long before exploitative economic practices are brought to an end if capitalism has to survive. In the meantime a few wise businesses shall make the change on their own and be ahead in the race.

Wise and happy business organization realize that it is not just necessary to pay the CEOs a big wage but also the staff at the lowest rungs because they are the backbone or foundation on which any business stands. Hopefully this note would inspire the owners of reliance stores to improve condition of workers in organizations they have control over and thus continue to make their otherwise excellent contribution to the Indian Marketplace. This author's best wishes are with Mr. Mukesh Ambani for the same.

This author has been in an academic career and it may be verified that in the last two engineering colleges where he served as the director one of his contributions was getting the salary of the lowest paid in the colleges increased within a few months of joining, therefore this note has no other purpose than a call of the heart.


http://www.techinsider.io/tree-covered-skyscraper-redefines-green-architecture-2015-10


UPDATE JUNE 14, 2016

I visited the same store again after a month. This blog post appears to have had an impact. A link was tweeted to Mukesh. The store had lots of new staff and the counters were well manned. The working hours were improved by dividing in two shifts. The salary however was not yet revised but someone at the store mentioned, it was under consideration based on a review of the present changes. Best wishes to Mukesh Amabani ji. We are all in this together to make the world a better place for all. Thanks to Mukesh Ji for responding positively to the suggestions inherent in the note.
One more suggestion to beautify his building -  Let flowering creepers climb on the rather thin round poles supporting balconies all the way to the top, with light supports painted in green leaf shades for their climb added and a sufficiently high compost soil base for the roots with auto drip watering.

Reliance Retail Ltd. is a subsidiary company of Reliance Industries. Founded in 2006 and based in Mumbai, it is the largest retailer in India in terms of revenue (as per wikipedia).

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