Grow incomes and create a market

Well that's how the market flows, right? Or let's rephrase it to 'growing incomes fuel (or create) a market'. When I got a pay hike for the first time, I did go out and buy something that I could not buy with my earlier salary. A simple act that I believe people across the world, perform. Maybe more so in America than many other places, but still, it is common.

Because more money helps you meet existing needs that have not been adressed. Or leads to the creation of needs that you had not felt before. Or simply, the creation of want. Whatever the case, it does propel purchases ranging from those that are long term in nature (paying installments for a house) or immediate (buying that pack of chocolate you had been eyeing for some time). And turns out to be a boon to companies and organizations that sell these products. So, logically, the more people who could buy your product (unless you are a niche marketer and even then you would want to grow your presence in the target segment), the more your company will profit and grow. That is the very reason that Hindustan Lever (of the UniLever family) came up with satchet packs for the rural market in India. People who had the need (or could be led to believe that they had the need) could now consume poducts like washing powder, shampoo and bathing bars that was available in affordable packs. Of course Coca Cola has Chhota Coke now, priced for and aimed at the same market.

If we extend that same logic, wouldn't it be correct to say that if more people earned more money, the market for these and other companies would grow? Therefore, doesn't it make sense to get more people into the 'earning more' bracket. Doesn't it make sense to move people from the Below Poverty Line strata to a level where they can earn a somewhat decent livelihood?

If that is true, then why is it that the second layer of industry that these big players support--the bottling plants, the glass bottle and plastic satchet manufacturers, the contractors, etc.--refuse to raise livelihood wages for labour? The national minimum wage in India for all scheduled employments per day is Rs. 80. But a labourer in the unorganized sector is paid even less (Rs. 80 is roughly equivalent to 1GBP or less than 2USD. Wouldn't it make more sense all around if these Grade 2 companies paid their employees more and enabled them to consume more. Direct impact on increasing sales for the consumer goods companies. This in turn can lead to more business for the Grade 2 companies and the possibility of higher rates. Happiness all around. Or is this too simplistic? If not, how does it make economic sense to pay wages that do not allow for even a basic life for an individual and their family? For one profiteer to make all the money there is.

More tomorrow.