Themes > Features
Public Works and Wages in Rural India
|C.P. Chandrasekhar and Jayati Ghosh|
''small round'' surveys of the NSSO are usually not considered to be
so good at capturing trends, because their smaller size makes them non-comparable
with the quinquennial large surveys. However, the 64th Round was a much
larger survey than normal (with a sample of 1,25,578 households: 79,091
in rural areas and 46,487 in urban areas, covering a total of 5,72,254
persons) and was concerned primarily with employment and migration.
It therefore allows us to examine the effects of one the biggest public
intervention in rural labour markets in several decades: the Mahatma
Gandhi National Rural Employment Guarantee Scheme (MNREGS) which was
implemented from 2006-07 and by 2007-08 had formally spread to cover
all the districts of the country.
the very least, surely government representatives should be happy when
the wages come closer to the legal minimum wage - that is, of course,
if they are at all serious about implementing their own laws. Such a
tendency for increasing wages should definitely be celebrated in a country
in which poverty and undernutrition are so rampant especially among
the rural labouring class. In addition, they should be happy because
higher wages in the countryside also mean increased effective demand
for rural goods and services, and contribute to reviving a very distressed
rural economy through the multiplier effects of workers’ spending out
An important reason for that emerges from Chart 3: the MNREGS has been so successful in attracting women workers because there is hardly any gender gap in the wages paid, unlike almost all other forms of work in rural areas. In fact, the average wage received by women workers in MNREGS was slightly higher than the average wage received by men. This compares very favourably even with other form of public works, but particularly with non-public work, where the gender gap remains huge. Further, on average wages received in MNREGS were significantly higher than those received by casual labour in other kinds of work.
A look at the trends in gender gaps in wages confirms this point. Chart 4 shows female wages as a percentage of male wages in both urban and rural parts of the country. India already had one of the highest gender gaps in wages in the developing world, and in urban India this gap worsened in the first half of the past decade and remained at around the same level thereafter. However, in rural India there has been a significant reduction in the gender gaps in the latest period, and this can be related very substantially to the impact of the MNREGS. This impact is both direct, in terms of the higher wages paid to women in this scheme; and indirect, in terms of the effects on women workers’ reservation wages and bargaining power.
Surely, even the most diehard opponent of the scheme would find it hard to argue that this is a bad thing. Indeed, even if the MNREGS has been only marginally successful in raising male wage rates in the countryside, the effect of the scheme in raising female wages is already a major positive feature that should be applauded.
The gender-differentiated impact of the scheme in terms of the impact
on rural labour markets continues to be evident in terms of unemployment
rates, shown in Chart 5. For male workers, there has been no impact
on this feature: in fact, unemployment rates (by both Current Daily
Status and Current Weekly Status indicators) have continued to rise.
However, female open unemployment rates have shown decline, albeit relatively
marginal falls from their previous highs.
© MACROSCAN 2011