Editor’s Note: This is the first article in a five-article series named ‘The Tales of Toil’ that discusses and highlights the realities, needs and interests of the working class in India.
Voltaire once said, “labour preserves us from three great evils — weariness, vice, and want“. Labour has been the bulwark over which civilisations were built and global dynamics changed. Even today, migration of labour and market forces form one of the key pillars, if not the key pillar, of international political economy. It is estimated that over 600 million new jobs have to be created by 2030 to keep pace with the growth of the working age population in the world. We also need to do more for those who already are a part of the work-force with some 780 million men and women not earning enough to lift themselves and their families out of the $2 a day poverty thresh-hold. This is in line with the objective set by Goal 8 of the 2030 Agenda for Sustainable Development by the United Nations, which states, “Promote inclusive and sustainable economic growth, employment and decent work for all.”
In many places, having a job does not ensure an individual’s ability to escape poverty. Lack of opportunities for decent work, insufficient investments and under-consumption erode the basic social contract that is an integral part of any democratic society. As per the International Labour Organization’s World Employment and Social Outlook – Trends 2018 document, the global unemployment rate was at 5.6% in 2017, which corresponded to 192.7 million unemployed individuals. This was expected to fall by 0.1% in 2018, thereby keeping the number of unemployed essentially unchanged despite the presence of a labour force that is growing. What is more important and interesting is to look at the contribution of various countries to these trends and realities. While developed countries gave a strong performance with the unemployment rate projected to fall by an additional 0.2%, the picture is not as good in emerging and developing countries: employment growth is slated to fall short of the growth in the labour force, raising the headcount of unemployed persons by 0.9 million in 2018. In India, the unemployment rate is projected to remain at 3.5% over the period 2017-2019, which, due to rising population, will be equivalent to 18.3 million, 18.6 million and 18.9 million unemployed people in 2017, 2018 and 2019 respectively.
Realities Of The Labour Market In India
India has always had a large labour market due to the human resource it has. While the primary sector faces its own fair share of issues and problems in India, the share of informal employment has risen within most of the manufacturing industries. This is partially due to labour market rigidities that prevent creation of employment opportunities. Lately, while there has been significant job creation in some services that are Information and Communication Technology (ICT)-intensive over the past two decades, a significant number of these jobs have been in traditional low value added services, where there is a certain element of informality and where vulnerable forms of employment are usually dominant. The spurt in these specific kind of jobs has not been successful in meeting the employment demands of India’s population.
If we look at the Annual Report 2017-2018 of the Ministry of Labour and Employment, Government of India, the numbers therein show the problems in great detail. In the 5th Employment Unemployment Survey (2015-2016), the Labour Force Participation Rate (LFPR), which is is the sum of all employed workers divided by the working age population, was 75%, 23.7% and 50.4% for men, women and in total respectively. For the same period, Worker Population Ratio (WPR), which is the the proportion of an economy’s working-age population that is employed, was 72.1%, 21.7% and 47.8% for men, women and in total respectively, and the unemployment rate was 4%, 8.7% and 4.3% for men, women and in total respectively. The unemployment rate has plateaued at around 3.5% this year.
ThWhile the former ensures the timely payment of wages and that no unauthorised deductions are made from the wages of the workers, the latter was enacted to safeguard the interests of the workers mostly in the unorganised sector. Under the provision of the Minimum Wages Act, “both the Central Government and State Governments are the appropriate authorities to fix, revise, review and enforce the payment of minimum wages to workers in respect of scheduled employments under their respective jurisdictions.”
There are 45 scheduled employments in the Central Sphere and more than 1,700 in the State Sphere. The enforcement of the Minimum Wages Act, 1948 is ensured at two levels. While in the Central Sphere, the enforcement is done through the Central Industrial Relations Machinery (CIRM), the compliance in the State Sphere is ensured through the State Enforcement Machinery. It is, however, not only the minimum wages but also the wage ceiling that matters. In exercise of the powers conferred by sub-section (6) of Section 1 of the Payment of Wages 1936 Act, the Central Government, on the basis of figures of the Consumer Expenditure Survey published by National Sample Survey Office, has recently enhanced the wage ceiling to Rs. 24,000/- per month with effect from August 2017, for the benefit of the workers. Due to the influence of the state government in setting the wages in a state, there are large differences in the wages across the country today. In urban areas, regular wages are highest in Haryana, with Assam, Jharkhand, Jammu and Kashmir, and Karnataka not far behind, while the lowest regular wages prevail in Gujarat. In rural India, the states that had the highest wages for regular workers were Jharkhand, Jammu and Kashmir, Uttarakhand, Bihar and Himachal Pradesh, while those with the lowest wages were Karnataka, Odisha, Andhra Pradesh, West Bengal and Madhya Pradesh.
India has been making steady growth in its economy with a regular rise in its GDP. However, this rise is not necessarily translated into money for the workers. While GDP per worker, including the self-employed, in 2011–12 was estimated at Rs. 1,75,539 per annum, the average income of wage workers was Rs. 81,819 per annum, or approximately 46.6% of the GDP per worker. This showed the discrepancy between the GDP growth and the income-patterns of workers. In India, the labour income share of the total national income declined from 38.5% in 1981 to 35.4% in 2013. This suggests that the profits, investments and other income from capital were increasing much faster than the compensation towards labour. It also implies that income is concentrated in the richer sections of society, which increases the inequality. This decline in labour income share has been found to be a global trend. On top of this, one needs to look at the subtle nuances of wage inequalities as well. As per the International Labour Organization’s recent reports published in 2018, for regular workers in rural India, wage inequality increased sharply in 2004–05 and declined slightly in 2011–12, but to a level higher than in 1993-94. For all casual workers, particularly rural women workers, the levels of inequality reduced over the period of the study, mainly because of public policy through the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA). An adequate enforcement of minimum wages could close the gap between the lowest and the middle wage groups.
The wages earned by workers in India are closely found to be tied to social identities. Discrimination along social lines is still as prevalent as it was when India got independence. One of the major forms of wage-related discrimination is along the gender divide. As per the International Labour Organization’s India Wage Report 2018, regular rural female workers who are not highly educated received roughly 53% of men’s wages, while women with ‘high educational attainment’ are found to earn around 73% of men’s wages. Regular female workers in urban areas with a primary education or less earn around 60% of what their male counterparts earn, while women with a secondary or higher education earn about 77% of their male counterparts’ incomes. The wage differential also exists along the lines of caste and social groups, with the schedules castes and tribes seen to be well behind people from the General category in urban as well as rural areas.
In the second article in this series, we will look at some of the initiatives taken by the Indian government recently, on this front.