ILO Report Flags Wage Inequality in India

Highlights of the report

  • Real average daily wages in India almost doubled in the first two decades after economic reforms, but low pay and wage inequality remains a serious challenge to inclusive growth.
  • Overall, in 2009-10, a third of all of wage workers were paid less than the national minimum wage, which is merely indicative and not legally binding. That includes 41% of all casual workers and 15% of salaried workers.
  • 84.7% of jobs in Indian economy is in informal economy and more than 90% of women workforce is in informal sector.
  • In 2011-12, the average wage in India was about 247 rupees a day, almost double the 1993-94 figure of 128. However, average labour productivity (as measured by GDP per worker) increased more rapidly than real average wages. Thus, India’s labour share — or the proportion of national income which goes into labour compensation, as opposed to capital or landowners — has declined.
  • The rise in average wages was more rapid in rural areas, and for casual workers. However, these groups started at such a low base that a yawning wage gap still remains. Thus, the average wage of casual workers — who make 62% of the earning population — was only 143 a day.
  • Daily wages in urban areas (384) also remain more than twice as high as those in rural areas (175). Regional disparities in average wages have actually increased over time, with wages rising more rapidly in high-wage States than in low-wage ones.
  • The gender wage gap decreased from 48% in 1993-94 to 34% in 2011-12, but still remains high by international standards. And of all worker groups, the average wages of casual rural female workers was the lowest, at just 104 a day.

Challenges

  • As per the study the minimum wage system in India is quite complex. The minimum wages are set by state governments for employees in ‘selected, scheduled’ employment and this has led to 1709 different rates across the country. As the coverage is not complete these rates are applicable for an estimated of 66 % of wage workers.
  • A national minimum wage floor was introduced in the 1990s which has progressively increased to Rs 176 per day in 2017 but this wage floor is not legally binding, in spite of a recurrent discussion since the 1970s.-

Location: Thiruvananthapuram, Kerala, India

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