Low pay and unequal wages remain a malady in India despite growth

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As per a new ILO report, while employment has grown in the organised sector, there is too much of informality and no social security is offered in most of the jobs.

India’s gross domestic product (GDP) has grown at an annual average rate of seven per cent in the last two decades, however, the growth in GDP hasn’t made any difference to a large part of the society. The labourers in our country are still paid very low and there is a lot of inequality in terms of wages that persists.

As per a India Wage Report report by the International Labour Organisation (ILO), the real wages has doubled and the GDP increased by four folds between 1993 and 2012, but there is a lot of segmentation and informality in the country’s labour market. This naturally acts as a hurdle in ensuring adequate working environment and inclusive growth.

As per the wage specialists at ILO, it is rather surprising that no great effect has been noticed among the low-wage earners. A stable wage policy is crucial to ensure that casual labourers who earn daily wages and do not enjoy any job security benefit in some way.

According to the Employment and Unemployment Survey (EUS), almost 62 per cent (121 million) of employed people in 2011-12 were casual labourers. This indicates that employment in the organised sector has definitely seen a rise. However, most of these jobs are of an informal and casual nature, offering no social security or benefits.

In 1993–94, women used to earn 48 per cent less than their male counterparts. While this figure has come down to 38 per cent today, the fact remains that gender disparity exists. According to NSSO data, women workers continue to get lower salaries/wages than men even though the daily wages of women have risen more rapidly than that of men. Also, rural workers earn 49 per cent less than their urban counterparts. Clearly, there are disparities amongst states and casual and salaried workers as well.

The average wage level of regular urban labourers is very low in states, such as Punjab, Tamil Nadu, Gujarat and Karnataka that boast of per capita income of more than Rs 100,000, where as Haryana tops the list for the highest average daily regular urban wage (Rs 783), followed by Assam (Rs 607), Jharkhand (Rs 543), and Jammu & Kashmir (Rs 495). Clearly, there is no connection between a state’s per capita income and the wages of its regular urban workers. The story is similar for rural workers

The wage gap has decreased from 48 per cent in 1993-94; it fell to 45 per cent in 2005-05 and then to 34 per cent in 2011-12. This is because of the Mahatma Gandhi Rural Employment Guarantee Scheme (MGNREGS), which is a government programme, that as the name suggests, guarantees work and minimum wages to rural labourers. However, the gap of 34 per cent is still higher than the global average, which is said to be about 23 per cent in 2015.

As per the ‘Men and Women in 2017’ study by the Government, despite higher education, a woman graduate earns merely Rs 609 per day, on an average, whereas her male counterpart earns Rs 805. This is not an enviable gender wage gap.

The average daily earning of regular workers in the cities and urban areas is Rs 449 on an average. This is 49 per cent more than their rural counterparts who hardly make Rs 300 daily. The figure for casual workers in the rural areas is even worse, at Rs 138 per day.

Women were found to earn less than their male counterparts in every sector in the urban areas. The regular urban man earns the highest daily— Rs 470 a day. A casual rural woman worker earns the lowest, that is, an average of Rs 104 a day.

It appears that more casual and contractual jobs/workers are being added to the organised sector, whereas no significant growth has been noticed in the number of regular jobs since 1991.
There has been a widening of the gap between the highest and lowest average daily wages across states since 1993–94.

Casual labourers in the highest-income states made 238 per cent more than their counterparts from the lowest-earning states in 2011-12. This was significantly more than the figure of 168% in 1993-94.

According to the report, the more developed states with better economies do not have higher average wages for regular workers than the less developed states.

Haryana tops the list for the highest average daily regular urban wage (Rs 783), followed by Assam (Rs 607), Jharkhand (Rs 543), and Jammu & Kashmir (Rs 495). Clearly, there is no connection between a state’s per capita income and the wages of its regular urban workers.

The average wage level of regular urban labourers is very low in states, such as Punjab, Tamil Nadu, Gujarat and Karnataka that boast of per capita income of more than Rs 100,000. The story is similar for rural workers.

Despite India being the first of the developing nations to establish the Minimum Wages Act (1948), it has not been as successful as expected in reducing inequality. Things are complicated due to the existence of 1,709 different minimum wage rates across the country. Also, it is legally applied only to a limited number of workers in ‘scheduled’ occupations.

Minimum wage rates are established by state governments, and are not a reflection of the cost of living. In 2013, agricultural labourers in Arunachal Pradesh, Orissa and Karnataka were earning Rs 90, Rs 126 and Rs 269 a day, respectively.

Only 66 per cent of workers are covered by the Minimum Wage Act. The remaining 34 per cent that do not come under ‘scheduled’ category, do not fall within the scope of the minimum-wage law.

In 1991, a national minimum wage was introduced. However, its application is not legally binding. As per the report, 15 per cent of regular workers and 41 per cent of casual workers in 2009, were paid less than this minimum wage.

The wage inequality can be taken care of by making the minimum wage structure simpler, by making it legally binding to all wage workers and introducing statutory backing.

Governments should take all possible measures to transform low-productivity sectors to high-productivity sectors by gathering more skill and ensuring a steady supply of educated workers. With an increase in the proportion of higher-skilled workers, there will be an increase in the wages of lower skilled workers, which will lower inequality.

It is also essential to make workers aware of minimum wages and their rights. MGNREGS is one such scheme that not only educates workers but also allows them to share information with other groups desiring wage increments. It is not difficult to ensure compliance and supervision, as the wages are electronically transferred.

Inclusion is possible at a time when the economy is in a growth phase. Lessons need to be learnt from countries such as China and Brazil. The latter revises minimum wages regularly keeping in mind the GDP growth of the last two years.

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