ABSTRACT
Decline in average manufacturing wages documented in the Parts II and III have important potential consequences for the trends in labor productivity in this sector. It has been argued in Chapter 3 above that one of the major arguments for the wage hike in the immediate post-colonial years in subSaharan Africa was that the change in the labor system from the migratory to a more stabilized one inducing substantial increase in labor efficiency, so that wage costs per unit of output might not increase proportionately, and might even fall in the long run. It is possible that the persistent wage decline since the seventies might have worked in the other direction and reduced labor efficiency. If urban households have been forced by the decline in wages to revert, at least partly, to the old system of migratory labor — as indeed the Kenya case study suggests has happened — then we are back to the world of the Carpenter Commission and its concerns about the impact of labor instability on productivity. It can be hypothesized that inter-sectoral mobility and the transport system have developed so much in the years since the Carpenter Commission produced its report, that a household could cope with the falling formal sector wage by devoting more of the labor time of its members to different sectors of the economy. In this case the fall in wages will not lead to a significantly higher labor turnover and fall in productivity in the urban formal sector. But such thoughts remain at the moment as hypotheses. Case studies are needed to throw light on the impact of real wage decline on labor turnover and productivity, as well as on the labor market adjustments of households.
