India Wage Report 2018: Wage policies for decent work and inclusive growth

Based on the NSSO’s 2011-12 data, ILO estimates that of a total of 402 million employed persons, 51.4 per cent (206 million) were self-employed and 48.6 per cent (195 million) were wage employees – including regular/salaried employees (74 million) and casual workers (121 million).

A national minimum wage floor was introduced in 1991 and progressively increased to Rs. 176 per day in 2017. However, it is not legally binding, and there is no consensus about the methodology that should be used to determine the wage rate. As a result, neither central nor state governments is using it as a floor to determine minimum wages.

The national average daily wage in 2011-12 was estimated at Rs. 247.

Women are over-represented in low-skilled occupations and comprise 67 per cent of the female workforce in 2011–12. Women earn 69 per cent of men’s average daily wages.

Regular rural female workers who are not highly educated received roughly 53 per cent of men’s wages, while women with ‘high educational attainment’ earn around 73 per cent of men’s wages.

Regular urban female workers with a primary education or less earn 58-60 per cent of what their male counterparts make, while women with a secondary or higher education make about 77 per cent of their male counterparts’ incomes.

Wage differentials between social groups clearly show that the Scheduled Castes and Scheduled Tribes are well behind Others (‘forward castes’) in rural as well as urban areas.

In urban areas, regular wages are the highest in Haryana, followed by Assam, Jharkhand, Jammu and Kashmir, and Karnataka. The lowest regular wages prevail in Gujarat, followed by Chhattisgarh, Tamil Nadu and Andhra Pradesh.

In rural areas, the states with the highest wages for regular workers were Jharkhand, Jammu and Kashmir, Uttarakhand, Bihar and Himachal Pradesh. Those with lowest wages were Karnataka, Odisha, Andhra Pradesh, West Bengal and Madhya Pradesh.

While GDP per worker (including the self-employed) in 2011–12 was estimated at Rs. 175,539 per year, the average income of wage workers per year was Rs. 81,819, or approximately 46.6 per cent of GDP per worker.

An adequate enforcement of minimum wages could close the gap between the lowest and the middle wage groups.

For regular rural workers, both female and male, wage inequality increased sharply in 2004–05 and slightly declined in 2011–12, but to a level higher than in 1993-94.  For all casual workers (especially women in rural areas) the levels of inequality reduced over the period of the study, mainly because of public policy through MGNREGA (ensuring minimum wages).

The labour income share (of the total national income) in India declined from 38.5 per cent in 1981 to 35.4 per cent in 2013. This suggests that profits, rent and other income from capital were increasing faster than compensation towards labour. It also implies that income is concentrated in richer households, which increases inequality. This decline in labour income share is part of a global trend.

The Committee on Fair Wages, 1948, recommended that the government set up state-level wage boards at the state level to develop a wage-fixing machinery and a wage structure for organised labour. The report notes that these boards have weakened since liberalisation in the 1990s.

The report’s recommendations to improve the current minimum wage system are based on ILO standards, a review of a vast body of literature, and the conclusions of a 2015 workshop jointly organised by the V.V. Giri National Labour Institute and ILO New Delhi. Participants proposed that their objectives should include providing “for equity in the distribution of the fruits of economic development.”