Wages of virtue

(Source: Indian Express by P. Raghavan Posted online: Thu Jul 14 2011, 00:28 hrs)
The results of the 66th round of the National Sample Survey (NSS), which was conducted in 2009-10 and focused on employment, have been mired in controversy, with some experts questioning the credibility of the numbers. Its findings — a sharp deceleration the growth of the labour force, of the workforce and even of unemployment rates, have been challenged. However, the clamour about the robustness of the survey’s results has only served to camouflage its other major finding: the sharp surge in wages to an all-time high.
This is an important indicator of the growing impact of an inclusive growth strategy. And what is more significant is that wage gains have been extensive, covering all labour markets — both rural and urban, male and female, This, perhaps, explains the continued buoyancy in consumer markets despite the stagnant level of investment in the last few years.

Also interesting is the reversal of trends in growth rates. Wage gains have accelerated faster for women workers, in both salaried and casual-worker segments. For regular, or salaried, employees, the largest gains have been in urban markets; for casual workers, in rural markets — possibly due to the impact of NREGA. However, looking at the wage-gain numbers across genders shows that it was female workers who made the largest gains, in both rural and urban sectors. This might indicate a tightening in the availability of female workers across the board — perhaps due to withdrawals from the labour force.

On the positive side, the higher growth of wages for female workers has pushed up the ratio of female-to-male wages across most segments. The only exception is the urban casual-labour market, where the ratio has been relatively stable. This is a significant turnaround; the female-to-male wage ratio had steadily declined for almost three decades since 1983.

A look at the trends over the last 10 years would provide a better perception of these gains. While the wages of urban, salaried women workers grew an annual average rate of 15 per cent to Rs 309 in the five years between 2004-05 and 2009-10, the wages of regular women workers in the rural sector increased by 12.8 per cent, to Rs 156. In contrast, the wages of male salaried workers went up by only 13.2 per cent, to Rs 378 in the urban sector and by 11.4 per cent, to Rs 149 in the rural sector.

For casual workers, too, wages increases were the highest for female workers, up by 14.6 per cent to Rs 69 in the rural sector, and by 11.8 per cent to Rs 77 in the urban sector. For male casual workers, wages grew at a lower 13 per cent to Rs 102 in the rural sector, and 11.5 per cent to Rs 132 in the urban sector.

But despite the significant wage gains made in the last five years, wage rates remain highly skewed. Look, for instance, at the daily average earnings of male, salaried urban workers. This is the best-off, highest-paid labour segment; and in big states, their average earnings varied sharply, from Rs 283 to Rs 709. The most disadvantaged segment of the workforce, is female casual workers in rural areas; and here the disparity was even larger, with daily wages varying between Rs 58 to Rs 207 during the year.

And where was the average daily wages of the regular or salaried workers the highest? Interestingly, not in the richest states, but in middle- and low-income states, including Chhattisgarh, Jharkhand, Himachal Pradesh and Kerala. In sharp contrast, male urban regular workers were paid the lowest in the richest states like Gujarat, Haryana, and Tamil Nadu. (The difference is between Rs 150 and Rs 200.) It is indeed a puzzle why fast-industrialising states, like Gujarat and Tamil Nadu, with larger manufacturing sectors, continue to be among those with the lowest wages for regular salaried employees. Is it perhaps that the low wages here are an added incentive for rapid industrialisation?

Coming to the female casual workers in the rural sector — the most disadvantaged labour segment — states with the highest wages included Kerala, Himachal Pradesh, Haryana, Uttaranchal, Rajasthan and Punjab. In contrast, the states which paid the lowest daily wage to female casual workers in the rural sector included both middle-income and poor states: Madhya Pradesh, Maharashtra, Orissa, Karnataka and Chhattisgarh.

It certainly looks like it will take a long time for wage rates to converge across states.

The writer is a senior editor with ‘The Financial Express’