Decoding employment scenario in India and the burgeoning salary woes

There will always be a raging discussion about employment in India, the most populous country with a population of 140 crore people. There will also be issues about the country’s wage structure.

‘India Employment Report 2024: Youth Employment, Education and Skills,’ a report brought out by the International Labour Organization (ILO) and the Institute for Human Development (IHD), which has delved deep into labour and employment issues, comes as a wake-up call for the country’s policy makers to redraw its action plan and a more robust roadmap.

There is no iota of doubt about severe discrepancies in the salaries or wages being paid to contractual workers and those engaged in the country’s unorganized sector.

Of course, ILO and IHD have not come out with any earthshaking outcomes by analyzing the 2000-2022 data from National Sample Surveys (NSS) and the Periodic Labour Force Surveys (PLFS) but they have certainly forced the policy makers to fix the problem arising from rampant inequalities and inadequacies in wages and salaries to contractual and unorganized sector workers.

One may not like to talk about those in government jobs and in the organized sectors as they are better placed and they come with many guarantees and safety valves while the unorganized sector can at best be described as the ‘uncertain sector,’ the less said about their earnings, the better it is. It is domestic compulsions that force this lot to continue with the miniscule ‘earning’ in order to meet the needs of their families. They don’t raise their voice against the meagre payments or demand pay enhancement as they fear losing even that job. Alas. labour laws and courts bring little cheer to them. So, keeping quiet is the best option.

According to the report, “wages and earnings are stagnant or declining. While wages of casual labourers maintained a modest upward trend during 2012–22, real wages of regular workers either remained stagnant or declined. Self-employed real earnings also declined after 2019. Overall, wages have remained low. As much as 62 per cent of the unskilled casual agriculture workers and 70 per cent of such workers in the construction sector at the all-India level did not receive the prescribed daily minimum wages in 2022. The production process has increasingly become capital-intensive and labour-saving. Due to increasing mechanization and capital use, the employment generation in India has become more and more capital-intensive, with fewer workers employed between 2000 and 2019 than in the 1990s.”

The report further says that “the share of manufacturing employment was stagnant, at around 12-14 per cent. The increase in non-farm employment was absorbed by construction and services.”

Going further, it says “There has been a rapid introduction of digitally mediated gig and platform work, which are algorithmically controlled by the platforms and have brought about new features in control of the labour process. Increasingly, platform and gig work have been expanding, but it is, to a large extent, the extension of informal work, with hardly any social security provisions. Disparities are predominant in the labour markets across states and regions.”

The report also warns that “the rates of urbanization and migration are expected to considerably increase in the future. India is expected to have a migration rate of around 40 per cent in 2030 and will have an urban population of around 607 million. The bulk of this increase in urban growth will come from migration. The pattern of migration also shows regional imbalance in the labour markets. The direction of migration in general is from eastern, north-eastern and central regions to southern, western and northern regions. Growth and employment growth remained stagnant up to 2019 and then moved upward. Between 2000 and 2012, employment saw an annual growth rate of 1.6 per cent, while gross value added grew at a much faster rate, at 6.2 per cent.”

For a long time, a debate has been going on about replacing the minimum wage system with a living wage. The deadline is 2025. It aims at fast-tracking efforts to lift millions out of poverty and ensure their well-being. Blessed with over 500 million workers and 90 per cent of them being in the unorganised sector, a proactive approach is required to address the wage anomalies in a wholesome manner, which neither adds extra burden to the employers nor lets them exploit the workers. Eight hours duty is something unknown to the unorganized sector. It is not less than 10 hours of toil. Forget the number of paid and emergency leaves they get in a year.

What kind of life a family of four – wife, husband and two children can lead with a monthly income of Rs. 10,000 to Rs. 12,500? Just imagine! Even those belonging to the medium income group – with a fixed monthly household earning of Rs. 60,000 to Rs. 70,000 in contractual jobs – have to face multiple hardships if they have to repay a housing loan while living in a bigger city. If they are in smaller cities, say, Tier I or Tier II, then their problems are more acute as contractual jobs don’t fetch higher monthly salaries there. So, the task at hand is enormous. At present, there is no mechanism to assess the people’s financial hardships while they brave an ever increasing cost of health and education.

Is shifting to the living wage from the concept of minimum wage a viable solution? The ILO defines living wage as “the wage level necessary to afford a decent standard of living for workers and their families, taking into account the country’s circumstances and calculated for the work performed during normal hours.”

The minimum wage aims to protect workers from low pay, the living wage promises enough income to cover basic needs such as food, clothing, shelter, and more. The question is - Can we do this? Will our small and medium enterprises be ready to bear with increased labour costs? Is it possible to strike a balance between affordability for businesses and workers’ well-being?

Yes, it is quite possible. For this to happen, an inclusive outlook is required. The million dollar question is will the stakeholders be ready to take the step?