To many observers, Noida’s industrial unrest appears to have come as an “out-of-syllabus” surprise. Workers have come out in protest against conditions that have been difficult and onerous, and the immediate trigger of wage hikes in Haryana but not Uttar Pradesh, appear to have lit the match. But this has been a crisis that has been brewing for years.
In 2018, social scientists Amit and Nayanjyoti published a study of production regimes and collective bargaining in Indian manufacturing. — through six months of fieldwork in the Gurgaon-Manesar belt, they found that integration into global production networks brought industrial growth but systematically dismantled collective bargaining. Capital responded to worker militancy through three concurrent strategies: Automation to make skill and experience redundant; contractualisation to replace permanent workers with a disposable, non-unionisable majority; and production-shifting to newer units with weaker labour regimes. The result is worsening conditions alongside growth.
In 2026, the conditions that drove workers onto the streets are an extension of this logic. Employees at garment factories and light manufacturing units — many of them producing for export markets reported working 12-hour shifts as the routine rather than the exception, despite a legal cap of eight to nine hours. Monthly wages ranged between ₹13,000 and ₹15,000. With sharply rising utility, habitat and health costs, this has squeezed livelihoods to the breaking point.
And there are further challenges. Overtime, legally required to be paid at double rate, was routinely either unrecorded or paid at the standard rate. The six formal demands that workers put forward were not demands for new entitlements: They were demands that existing law actually be enforced, but were not.
Before concluding that this represents an incomprehensible failure, one might ask whether low wages and weak labour protection are simply the price of industrial take-off. One might argue, for example, that there is a need for low-wage manufacturing to effect inclusive and widespread growth and transformation, and that labour repression has been important for the success of some prominent late industrialisers.
It is certainly true that South Korea and Taiwan for example industrialised through labour-intensive export production with wages held down in the early stages. In comparison to, say, South Korea under Park Chung-Hee where independent unions were banned, strikes were illegal, and the state intervened systematically to keep wages below market rates, it is not clear that Noida is worse off in 2026.
However, such a conclusion is misleading. Unlike in India, Korean workers, even during the most repressive phases, saw significant real wages rise. (This was also the case over the medium term in Singapore, Taiwan and Hong Kong). Korean firms through a judicious industrial policy were continuously moving up the value chain. These firms raised productivity fast enough that a compressed wage share still meant more in absolute terms. In addition, in East Asia, there was support in the form of supply side policies such as better public housing. Repression can be “managed” if there is genuine industrial upgrading, and higher productivity growth.
In this regard, Indian productivity has grown much more slowly over the last decade than previous ones. This is now becoming well known. In a forthcoming paper, Amit Basole and I document that it is a widespread phenomenon, with little precedent. With low productivity, slow upgrading of capacity, and a large surplus sector, it is difficult to see how real wages can grow adequately to compensate for difficult working conditions.
In the larger context of an export-oriented industrialisation, the news is not good either. In aggregate, Indian manufacturing exports are rising, but nowhere near the growth rates of Indian services exports in the last decade, and not adequately in key labour absorbing sectors. Between 2013 and 2023, India’s garment exports were essentially flat while Bangladesh’s more than doubled, and Vietnam went from a marginal player to a $31-billion dollar exporter. Industrial dynamism remains confined to some subsectors of manufacturing. In aggregate, low productivity growth has translated into low wage growth. In three of the four years between 2019 and 2023, inflation outpaced wage growth in manufacturing, meaning real incomes shrank. Unlike in East Asia, there is no rising tide. Suppressing wages may not simply be a phase on the path to something better, without an adequately thought through plan to move up value chains. As it stands, our current model is losing ground in global markets even as it grinds down the people who sustain it.
This is part of the larger problems of structural transformation. Manufacturing has been stuck at 13-16% of GDP for years, failing to become the mass employer it was for China or Vietnam. India’s economy has skipped the labour-intensive middle step, moving people from agriculture directly toward high-skill services. Worse, and more cruelly, those grasping at the weak middle rung in manufacturing, find that it is not remunerative, and extremely arduous.
Capital-labour relations do not take up much intellectual or policy space these days, but those involved know that the old arithmetic of class conflict remains alive. What is not paid in wages and dignity may eventually be paid in unrest. India’s policymakers have long treated this as a problem for another day. Noida suggests that the other day may be arriving.
Arjun Jayadev is the Director of the Centre for the Study of the Indian Economy at Azim Premji University. The views expressed are personal
