Strong wage policies needed to promote inclusive growth in India: ILO’s India Wage Report

Aug 22, 2018 13:03 IST
Strong wage policies needed to promote inclusive growth in India: ILO’s India Wage Report

The International Labour Organisation (ILO) on August 20, 2018 released a report titled ‘India Wage Report: Wage policies for decent work and inclusive growth’.

The report depicts that though India’s economy in the past two decades saw an annual average GDP rate of 7 percent, low pay and inequality persists in the country.

Wage inequality and gender wage gap still persist

The overall wage inequality in India declined since 2004–05; however, it continues to remain high.

The decline in overall wage inequality could be attributed to the doubling of the wages of casual workers between 1993–94 and 2011–12.

On the other hand, the increase in wage inequality for regular workers stabilised in 2011–12 in comparison to 1993–94 and 2004–05.

Despite a decline from 48 percent in 1993-94 to 34 percent in 2011–12, the gender wage gap is still steep. The wage gap exists for all kind of workers – regular and casual, urban and rural.

Women employed as casual workers in the rural economy earn the lowest in India, which is 22 percent of what urban regular male workers earn.

Estimates of National Sample Survey Office (NSSO)

  • The National Sample Survey Office (NSSO) estimates indicate that the real average daily wage doubled between 1993–94 and 2011–12.
  • There was a boost in wages of the most vulnerable categories including workers in rural areas, informal employment, casual workers, female workers and low-paid occupations. However, disparities remain there.
  • As per the Employment and Unemployment Survey (EUS) of the NSSO, in 2011–12, the average wage in India was about Rs 247 per day, and the average wage of casual workers was Rs 143 per day.
  • Only a limited number of salaried workers, mostly in the urban areas, and the highly-skilled professionals earned higher average wages.

Workers still earn less than the indicative national minimum wage

Despite India being one of the first countries to introduce minimum wages through the Minimum Wages Act, 1948, challenges still exist in providing a universal wage floor for all workers.

The minimum wages are set by state governments for employees in selected ‘scheduled’ employment and this has led to 1709 different wage rates across the country; and these rates are applicable only for estimated of 66 percent of wage workers.

A national minimum wage floor was introduced in 1990s which has progressively increased to Rs 176 per day in 2017.

In 2009–10, around 15 percent of salaried workers and 41 percent of casual workers earned less than the national minimum wage.

Nearly 62 million workers are still paid less than the indicative national minimum wage.

Recommendations: Strong wage policies needed for decent work and inclusive growth

  • The ILO report puts out several recommendations to improve the current minimum wage system through strong wage policies.
  • Some of these are extending legal coverage to all workers, ensuring full consultation with social partners on minimum wage systems, simplifying minimum wage structures, and taking stronger measures to ensure a more effective application of minimum wage law.
  • One of the recommendations calls for collection of statistical data on a timely and regular basis.
  • Complementary actions needed to address how to achieve decent work and inclusive growth, such as, fostering accumulation of skills to boost labour productivity for sustainable enterprises, promoting equal pay for work of equal value and strengthening social protection for workers.