Working More for Less
According
to data from the recently released NSS large survey, between 1999-2000
and 2004-05, there was a revival of aggregate employment growth to approximately
the rates achieved in the 1980s. In a previous paper, we had noted that
this employment growth was essentially in non-agriculture in both rural
and urban areas, and dominantly in self-employment for male workers,
as well as substantial increase in regular work for women workers.
Such
expansion would indeed be a sign of a positive and dynamic process if
it is also associated with rising real wages, or at least not falling
real wages. Therefore, in order to appreciate the nature of this new
employment, it is important to examine the trends in real wages and
remuneration for self-employment over this period. In this article we
focus on this issue.
Chart 1 presents the average wages of workers by category, in constant
1993-94 prices. All the wage data used here refer to the wages received
by workers in the age group 15-59 years. (In this chart as well as in
the following charts and tables in which real wages are presented, the
current price wage data have been deflated by the CPIAL for rural workers
and the CPI-IW for urban workers.)
It is evident that for most categories of regular workers, the recent
period has not been one of rising real wages. While real wages have
increased slightly for rural male regular employees, the rate of increase
has certainly decelerated compared to the previous period.
For
all other categories of regular workers, real wages in 2004-05 were
actually lower than in 1999-2000. The economy has therefore experienced
a peculiar tendency of falling real wages along with relatively less
regular employment for most workers.
The behaviour of real wages of regular female workers in rural areas
deserves some comment. The sharp increase in 1999-2000 may result from
statistical error, since it reflects a large and unlikely increase
in wages of only one category of such workers (those women workers who
had up to primary education only), as indicated in Table 1 below. Therefore
the changes in such wages are unlikely to be as sharp as suggested by
Chart 1.
As noted in the previous edition of MacroScan, regular employment has
been declining for male workers in particular, and in any case accounts
for a minority of the work force in India. So it may be more relevant
to see what has happened to the wages of casual labourers. This is presented
in Chart 2.
As
evident from Chart 2, real wages of casual labour appear to have increased
slightly in rural areas, although once again the rate of increased has
slowed down compared to the previous period. However, for both men and
women workers in urban areas, real wages for casual work on average
declined compared to 1999-2000. This is truly remarkable for a country
in which real GDP has been growing at an average rate of 8 per cent
over this period, and where much of this growth has been concentrated
in urban areas.
It was already evident from the first two charts that the gender gap
in wages tends to be quite large. There is also evidence that it has
been increasing over time. Chart 3 show average female wages as a percentage
of male wages for regular and casual workers. A number of features emerge
from this. First, this ratio is relatively low even by the standards
of other developing countries, although not as low as Southeast Asia.
Second, the gender gap in wages has increased for all categories of
workers urban and rural, regular and casual - between 1999-2000 and
2004-05. (Once again the particularly sharp changes for rural regular
workers may however reflect a data error for 1999-2000.) Third, the
gender wage gap tends to be much larger for casual work than for regular
work.
The
issue of the gender gap in regular work is particularly interesting,
because this type of female employment has increased in the latest period.
It now accounts for around 36 per cent of all urban women workers, even
though it is still less than 4 per cent of all rural women workers.
Therefore it is worth examining the trends in real wages of women in
regular jobs.
Table 1 presents this data. As noted above, there are
likely to be problems with the recorded information on average real
wages in 1999-2000, specifically of urban regular women workers who
are literate or have up to primary level education. However, even if
we ignore this particular number, the trends revealed in Table 1 are
startling. Over the first half of this decade, real wages of regular
women workers declined for every category of education level, and in
both rural and urban areas!
Table
1: Average daily wages of regular women workers by education level (Rs. per day at constant 1993-94 prices) |
|||
1993-94 |
1999-2000 |
2004-05 |
|
Rural
|
|||
Not
literate |
17.98 |
25.39 |
20.33 |
Literate
& up to primary |
23.92 |
101.69 |
27.17 |
Secondary
& Higher secondary |
57.61 |
79.40 |
57.00 |
Graduate
and above |
72.16 |
100.71 |
98.26 |
All |
34.86 |
71.79 |
48.66 |
Urban
|
|||
Not
literate |
26.75 |
31.62 |
24.54 |
Literate
& up to primary |
30.11 |
39.30 |
32.65 |
Secondary
& Higher secondary |
70.93 |
88.91 |
75.80 |
Graduate
and above |
98.59 |
143.22 |
135.65 |
All |
62.31 |
85.58 |
77.20 |
In
rural areas the average decline in regular women workers real wages
over the first five years of this decade was by 32 per cent, and in
urban areas by 10 per cent. Even if we ignore the outlier, the decline
in real wages in other categories was substantial. Illiterate women
workers in regular employment in rural areas faced average wage cuts
of 20 per cent, while those who had secondary and higher secondary education
faced average cuts of nearly 30 per cent! It should be noted that more
than 66 per cent of all rural women workers were illiterate, and 37
per cent of urban women workers were illiterate.
In urban areas, illiterate women workers experienced the sharpest declines
in real wages, at more than 22 per cent. Graduate women had the lowest
real wage decline of around 5 per cent but the point is that even
for this category, real wages on average fell.
All this should be seen in conjunction with dramatically increasing
rates of open unemployment, especially for women. While space does not
allow for a detailed discussion of this here, unemployment rates according
to this latest survey are now the highest ever recorded. Unemployment
measured by current daily status, which describes the pattern on a typical
day of the previous week, accounted for 8 per cent of the male labour
force in both urban and rural India, and between 9 and 12 per cent of
the female labour force.
The real expansion in employment has come in the form of self-employment,
which now accounts for around half of the work force in India. The increase
has been sharpest among rural women, where self-employment now accounts
for nearly two-thirds of all jobs. But it is also remarkable for urban
workers, both men and women, among whom the self-employed constitute
45 and 48 per cent respectively, of all usual status workers.
This makes the issue of remuneration in self-employment a particularly
important one. If working people are moving away from paid jobs to more
independent and more remunerative forms of self-employment, then that
is certainly to be welcomed. But if they are forced to take on any activity
on their own in order to survive, simply because a sufficient number
of paid jobs is not available, then that is another matter altogether.
This is especially the case for less educated workers without access
to capital or bank credit. Self-employment for such workers often means
that they are forced into petty low productivity activities with low
and uncertain incomes.
The latest NSS report confirms this, with some very interesting information
about whether those in self-employment actually perceive their activities
to be remunerative. This information is presented in Table 2.
Table
2: Perceptions regarding remuneration in self-employment |
|||||||
Per
cent finding their self-employed activity remunerative |
Per
cent finding this amount of Rs. per month remunerative |
||||||
0-1000 |
1001-1500 |
1501-2000 |
2001-2500 |
2501-3000 |
>
3000 |
||
Rural
males |
51.1 |
12.9 |
17.5 |
16.5 |
11.4 |
12.9 |
27.3 |
Rural
females |
51.4 |
34.2 |
23.5 |
15.4 |
8.9 |
7.2 |
9.9 |
Rural
persons |
51.2 |
21.2 |
19.7 |
16 |
10.5 |
10.7 |
20.5 |
Urban
males |
60.9 |
4.9 |
8.2 |
9.9 |
7.2 |
12.2 |
56.5 |
Urban
females |
50.9 |
32.8 |
20.2 |
12.6 |
7.7 |
8.1 |
18.3 |
Urban
persons |
58.6 |
10.4 |
10.6 |
10.4 |
7.4 |
11.5 |
48.9 |
It turns out that just under half of all self-employed workers do not
find their work to be remunerative. This is despite very low expectations
of reasonable returns more than 40 per cent of rural workers declared
they would have been satisfied with earning less than Rs. 1500 per month,
while one-third of urban workers would have found up to Rs. 2000 per
month to be remunerative.
As is to be expected, the material expectations of women workers were
far below those of men, yet despite this, around half of self-employed
women did not find their activity to be remunerative. Even in the case
of the relatively most satisfied group of self-employed workers, the
urban males, around to-fifths did not find their activity to be paying
economically.
This suggests that a large part of the increase in self-employment
and therefore in employment as a whole is a distress-driven phenomenon,
led by the inability to find adequately gainful paid employment. So
the apparent increase in aggregate employment growth may be more an
outcome of the search for survival strategies than a demand-led expansion
of productive income opportunities. Clearly, employment generation must
remain the central concern of our policy makers.