1 Manufacturing The micro economic theory of labour market posits that in the short run, assuming factor and product markets perfectly competitive, proft maximising frm goes on employing labour until the real wage rate equals the value of marginal product of the labour (Lal, 1979 provides a lucid explanation of the micro economic theory of wage). Quite important, in the short run, capital tends to remain fxed, making the output being sensitive only to the labour. However, the rationality that is applicable to the short run is unlikely to emerge as a proft maximising scenario when both the capital and labour change in the long run. Drawing cues from micro economic theory of production in the long run, the proft maximising employment of labour leads to wage is being determined by capital labour ratio (Appendix 1). While these models capture frms’ decision making to determine employment and wage, known as the demand side of the labour market, variations in wage also emanate from household-personal characteristics of labour, called the supply side of the labour market. As illustrated by the economic theory, wage may be specifed as function of age, years of schooling, and socio-demographic characteristics, culminating in direct relation between wage and years of schooling (Schultz, 1961). Juxtaposing both the demand and the supply, direct relation of wage with productivity, capital-labour ratio, and educational attainment presumably lead to an inference that points to why technological changes, implicit in increasing capital labour ratio over time, require workers with higher educational attainment who are to be paid higher for their higher productivity levels. Wages and Labour Productivity in Indian Manufacturing Bino Paul Tata Institute of Social Sciences, Mumbai The manufacturing labour market in India is far from being a space that allows free matching of employers’ and labour’s expectation. Indian manufacturing work systems continue to be highly homogenous, defying the emerging human resource management paradigms that are built around employee engagement, sustainable performance, gender diversity, career growth and trust. While there is a direct relationship between wage rate and productivity, the conversion of productivity to wage is interrupted by many factors importantly, archaic labour laws and ineffective enforcement systems that need widespread reform. 88