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NEWS ALERTS | Real wage rates of the rural workers hardly increased during the last 6 years
Real wage rates of the rural workers hardly increased during the last 6 years

Real wage rates of the rural workers hardly increased during the last 6 years

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published Published on Mar 11, 2022   modified Modified on Mar 15, 2022

In the absence of income or expenditure-based headcount ratio, the growth in the real wages (i.e., nominal wages adjusted against retail inflation) of the manual workers is considered to be a good proxy to assess the trends in poverty. This is because the manual, unskilled/ semi-skilled labourers exist at the bottom of the pyramid or economic hierarchy, and most of them belong to the social categories Scheduled Castes (SCs) and Scheduled Tribes (STs). A positive growth in their real wages (or real wage rates) is anticipated to improve their purchasing power (i.e., income or consumption expenditure) and lift them out of the poverty trap.  

Clearly, there exists inter-state differences in nominal wage rates, growth in nominal wage rates and growth in real wage rates, which we will see in this news alert. 

Against the backdrop of the Russia-Ukraine conflict, which is anticipated to cause both food and fuel retail inflation in India in the coming times, it is even more important to look at the past trends in wage rate growth of the rural workers. It should be noted that the year-on-year inflation in Consumer Price Index Rural exceeded the year-on-year inflation in CPI Urban during January 2022 at the national level. Even before the beginning of Russia-Ukraine conflict (i.e., during January 2022), in rural areas, retail inflation rate of 20.6 percent was noticed for 'oils and fats', aside from 8.44 percent retail inflation for 'fuel and light', 8.27 percent for 'transport and communication', and 9.65 percent for 'clothing and footwear'.    

At the national level, the average daily nominal wage rate for male construction workers in rural areas during the period from 2014-15 to 2020-21 was Rs. 316.9, which was greater than that of the male non-farm workers in rural areas. The average daily nominal wage rate for male non-agricultural labourers in rural areas during the period from 2014-15 to 2020-21 was Rs. 273.8, which exceeded the average daily nominal wage rates for male farm labourers in rural areas (i.e., Rs. 265.1). However, in Andhra Pradesh, Haryana, Himachal Pradesh, Jammu and Kashmir, Karnataka, Kerala, Meghalaya, Punjab, and Tripura, the average daily nominal wage rates for male agricultural labourers in rural areas during the period from 2014-15 to 2020-21 exceeded the average daily nominal wage rates for male non-farm labourers in rural areas. Please see chart-1.

Notes: The average (i.e., arithmetic mean) daily nominal wage rates for various categories of workers in rural India in the period from 2014-15 to 2020-21 has been calculated by the Inclusive Media for Change staff

Please click here to access the data in spreadsheet format

Source: Handbook of Statistics on Indian States 2020-21, released in November 2021, please click here to access

State-wise Average Daily Wage Rates in Rural India (Men - General Agricultural Labourers), RBI Handbook of Statistics on Indian States 2020-21, released in November 2021, please click here to access 

State-wise Average Daily Wage Rates in Rural India (Men - Non-Agricultural Labourers), RBI Handbook of Statistics on Indian States 2020-21, released in November 2021, please click here to access 

State-wise Average Daily Wage Rates in Rural India (Men - Construction Workers), RBI Handbook of Statistics on Indian States 2020-21, released in November 2021, please click here to access 

State-wise Average Inflation (CPI) - Inflation, RBI Handbook of Statistics on Indian States 2020-21, released in November 2021, please click here to access 

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At the national level, the agricultural nominal wage rate grew faster than the non-farm wage rate on average for male labourers in rural areas during the period from 2015-16 to 2020-21. However, in states like Assam, Bihar, Haryana, Madhya Pradesh, Odisha, Punjab, and West Bengal, the non-farm nominal wage rates grew faster than the farm wage rates on average for male workers in rural areas during the period from 2015-16 to 2020-21. Please see chart-2. 

Notes: The average growth in daily nominal wage rates for various categories of workers in rural India in the period from 2015-16 to 2020-21 has been calculated by the Inclusive Media for Change staff

Please click here to access the data in spreadsheet format

Source: Same as above
---

At the national level, the construction sector nominal wage rate grew slower than the non-agricultural wage rate on average for male labourers in rural areas during the period from 2015-16 to 2020-21. However, in states like Andhra Pradesh, Bihar, Himachal Pradesh, Maharashtra, Meghalaya, Punjab, Tamil Nadu, and Uttar Pradesh, the construction sector nominal wage rates grew faster than the non-farm wage rates on average for male workers in rural areas during the period from 2015-16 to 2020-21. Please take a look at chart-2.  

At the national level, the agricultural wage rate in real terms grew faster than the non-farm wage rate on average for male labourers in rural areas during the period from 2015-16 to 2020-21. However, in states like Assam, Bihar, Haryana, Madhya Pradesh, Odisha, Punjab, and West Bengal, the non-farm wage rates in real terms grew faster than the farm wage rates on average for male workers in rural areas during the period from 2015-16 to 2020-21. Please see table-1.

Table 1: State-wise Growth in Average Daily Wage Rates in Real terms for Male Agricultural Labourers, Male Non-Agricultural Labourers, and Male Construction Workers in Rural India, in %

Notes: The average growth in daily wage rates in real terms for various categories of workers in rural India in the period from 2015-16 to 2020-21 has been calculated by the Inclusive Media for Change staff

Please click here to access the data in spreadsheet format

Source: Same as above
---

At the national level, the construction sector wage rate in real terms grew slower than the non-agricultural wage rate on average for male labourers in rural areas during the period from 2015-16 to 2020-21. However, in states like Andhra Pradesh, Bihar, Himachal Pradesh, Maharashtra, Meghalaya, Punjab, Tamil Nadu, and Uttar Pradesh, the construction sector wage rates in real terms grew faster than the non-farm wage rates on average for male workers in rural areas during the period from 2015-16 to 2020-21. Please take a look at table-1.  

In the following paragraphs, we have discussed the trends in agricultural wage rates, non-farm wage rates, and construction sector wage rates (in rural areas) in detail. 

Agricultural wages in rural areas

The highest average daily nominal wage rate for male agricultural labourers in rural India during the period from 2014-15 to 2020-21 was found in Kerala (Rs. 653.93), followed by Jammu and Kashmir (Rs. 429.19), Tamil Nadu (Rs. 385.6), Haryana (Rs. 368.53), Himachal Pradesh (Rs. 366.23), and Punjab (Rs. 325.31). Please have a look at chart-1.

The lowest average daily nominal wage rate for male agricultural labourers in rural India during the period from 2014-15 to 2020-21 was observed in Madhya Pradesh (Rs. 183.97), followed by Gujarat (Rs. 190.07), Maharashtra (Rs. 215.71), Odisha (Rs. 216.87), Meghalaya (Rs. 219.93), Bihar (Rs. 230.43), Uttar Pradesh (Rs. 230.5), and Assam (Rs. 237.3). The related national level figure was Rs. 265.09 during the period from 2014-15 to 2020-21. Please consult chart-1. 

The highest average annual growth rate in nominal wage rates during the period from 2015-16 to 2020-21 was found in Karnataka (7.3 percent), followed by Andhra Pradesh (6.8 percent), Madhya Pradesh (6.4 percent), Uttar Pradesh (6.2 percent), Odisha (6.1 percent), and Meghalaya (6.0 percent). Please see chart-2.

The lowest average annual growth rate in nominal wage rates during the same period was noticed in Haryana (2.1 percent), followed by Rajasthan (3.3 percent), Kerala (3.5 percent), Punjab (3.9 percent), and Tamil Nadu (4.5 percent). Please consult chart-2.

The average annual growth of agricultural labourers’ wage rates in real terms during the period from 2015-16 to 2020-21 were negative in Haryana (-2.1 percent), Jammu and Kashmir (-0.3 percent), Kerala (-1.7 percent), Punjab (-0.4 percent), Rajasthan (-1.1 percent), Tamil Nadu (-0.8 percent), Tripura (-0.5 percent), and West Bengal (-0.1 percent). It should be noted that the rate of inflation in Consumer Price Index-General has been used to get the average annual growth of agricultural labourers’ wage rates in real terms. Kindly consult table-1.  

Some states witnessed negative growth in agricultural labourers’ wage rates in real terms for more than two years between 2015-16 and 2020-21. For example, Haryana experienced negative growth in 2015-16, 2016-17, 2017-18, 2019-20, and 2020-21. Likewise, Kerala faced negative growth in 2017-18, 2018-19, 2019-20, and 2020-21.  

At the national level, the agricultural labourers’ wage rates in real terms on average grew by 1.0 percent annually during the period from 2015-16 to 2020-21.

Please click here to access the spreadsheet in order to look at the trends in nominal wage rates, annual growth in nominal wage rates and annual growth in real wage rates for farm labourers in rural areas. 

Non-agricultural wages in rural areas

The rural economy is not just about farming any longer. That is why we have looked at the wage growth in the non-farm sector too. The highest average daily nominal wage rate for male non-agricultural labourers in rural India during the period from 2014-15 to 2020-21 was detected in Kerala (Rs. 639.01), followed by Jammu and Kashmir (Rs. 426.37), Tamil Nadu (Rs. 405.77), Haryana (Rs. 359.24), Himachal Pradesh (Rs. 311.10), and Punjab (Rs. 309.09). Please see chart-1.

The lowest average daily nominal wage rate for male non-agricultural labourers in rural India during the period from 2014-15 to 2020-21 was found in Madhya Pradesh (Rs. 191.47), followed by Meghalaya (Rs. 210.26), Gujarat (Rs. 213.51), Odisha (Rs. 218.06), Maharashtra (Rs. 226.70), Tripura (Rs. 230.36), Bihar (Rs. 243.51), and Uttar Pradesh (Rs. 243.97). The related national level figure was Rs. 273.79 during the period from 2014-15 to 2020-21. Please see chart-1.

The highest average annual growth rate in nominal wage rates during the period from 2015-16 to 2020-21 was noticed in Odisha (8.0 percent), followed by Madhya Pradesh (7.6 percent), Assam (6.6 percent), West Bengal (5.9 percent), Uttar Pradesh and Andhra Pradesh (5.6 percent each), and Bihar (5.5 percent). Kindly consult chart-2.

The lowest average annual growth rate in nominal wage rates during the same period was observed in Kerala (1.8 percent), followed by Haryana (2.4 percent), Meghalaya (2.8 percent), Tamil Nadu and Rajasthan (3.2 percent each), Tripura and Jammu and Kashmir (4.0 percent each), and Maharashtra and Punjab (4.2 percent each). Kindly consult chart-2. 

The average annual growth of non-agricultural labourers’ wage rates in real terms during the period from 2015-16 to 2020-21 were negative in Haryana (-1.9 percent), Jammu and Kashmir (-1.7 percent), Kerala (-3.5 percent), Maharashtra (-0.3 percent), Meghalaya (-1.2 percent), Punjab (-0.1 percent), Rajasthan (-1.2 percent), Tamil Nadu (-2.1 percent), and Tripura (-1.1 percent). It should be noted that the rate of inflation in CPI-General has been used to get the average annual growth of non-agricultural labourers’ wage rates in real terms. Kindly have a look at table-1.   

Some states experienced negative growth in non-agricultural labourers’ wage rates in real terms for more than two years between 2015-16 and 2020-21. For example, Haryana experienced negative growth in wage rates (in real terms) during 2016-17, 2017-18, 2018-19, 2019-20, and 2020-21. Likewise, Kerala faced negative growth rates in 2015-16, 2016-17, 2017-18, 2019-20, and 2020-21.  

At the national level, the non-agricultural labourers’ wage rates in real terms on average grew by just 0.3 percent annually during the period from 2015-16 to 2020-21. 

Please click here to access the spreadsheet in order to look at the trends in nominal wage rates, annual growth in nominal wage rates, and annual growth in real wage rates for non-farm labourers in rural areas. 

Construction sector wages in rural areas

The highest average daily nominal wage rates for male construction workers in rural India during the period from 2014-15 to 2020-21 was detected in Kerala (Rs. 810.3), followed by Jammu and Kashmir (Rs. 445.1), Tamil Nadu (Rs. 424.1), Haryana (Rs. 379.9), Himachal Pradesh (Rs. 368.7), Rajasthan (Rs. 347.7), and Punjab (Rs. 339.1). Kindly see chart-1. 

The lowest average daily nominal wage rates for male construction workers in rural areas during the period from 2014-15 to 2020-21 was found in Madhya Pradesh (Rs. 212.4), followed by Tripura (Rs. 230.4), Meghalaya (Rs. 231.7), Odisha (Rs. 247.1), Gujarat (Rs. 251.8), Uttar Pradesh (Rs. 267.4), Bihar (Rs. 270.8), and West Bengal (Rs. 274.0). The related national level figure was Rs. 316.9 during the period from 2014-15 to 2020-21. Kindly consult chart-1.

The highest average annual growth rates in nominal wage rates during the period from 2015-16 to 2020-21 was noticed in Meghalaya (20.9 percent), followed by Madhya Pradesh (7.4 percent), Odisha and Andhra Pradesh (6.8 percent each), Uttar Pradesh (6.4 percent), and Bihar (6.2 percent). Please see chart-2. 

The lowest average annual growth rates in nominal wage rates during the same period was observed in Kerala (0.9 percent), followed by Manipur (2.0 percent), Haryana (2.1 percent), Jammu and Kashmir (3.0 percent), Rajasthan (3.2 percent), and Gujarat (3.6 percent). Please see chart-2.

The average annual growth of construction workers’ wage rates in real terms during the period from 2015-16 to 2020-21 was negative in Assam (-1.2 percent), Haryana (-2.1 percent), Jammu and Kashmir (-2.7 percent), Karnataka (-0.6 percent), Kerala (-4.4 percent), Manipur (-6.3 percent), Rajasthan (-1.2 percent), Tamil Nadu (-0.9 percent), and Tripura (-1.1 percent). Please note that the rate of inflation in CPI-General has been used to get the average annual growth of construction workers’ wage rates in real terms. Kindly have a look at table-1.   

In the case of Meghalaya, the nominal daily wage rate of male construction workers fell from Rs. 186.0 in 2016-17 to Rs. 100.0 in 2017-18 i.e., a decline by -46.2 percent over previous year. However, the same bounced back to Rs. 273.2 in 2018-19 i.e., an increase by 173.2 percent over previous year. In real terms, the construction sector wage rate in Meghalaya grew by -47.7 percent in 2017-18 (over previous year) and 171.0 percent in 2018-19 (over previous year).

Some states experienced negative growth in construction workers’ wage rates in real terms for more than two years between 2015-16 and 2020-21. For example, Assam experienced negative growth in wage rates (in real terms) during 2017-18, 2018-19, 2019-20, and 2020-21.  

At the national level, the construction workers’ wage rates in real terms on average grew by just 0.1 percent annually during the period from 2015-16 to 2020-21.

Kindly click here to access the spreadsheet in order to look at the trends in nominal wage rates, annual growth in nominal wage rates, and annual growth in real wage rates for construction workers in rural areas. 

Data collection methodology

As a part of Rural Labour Enquiry, the daily wage rates in respect of eighteen agricultural and non-agricultural occupations are being collected along with rural retail price data by the Field Operations Division of the National Sample Survey Organisation since 1986-87, according to a February 2013 edition of the Indian Labour Journal. On the recommendations of the Governing Council of the National Sample Survey Organisation in its 61st meeting, the Labour Bureau started the compilation and analysis of wage rate data with effect from April, 1998. 

The Field Operations Division of the National Sample Survey Organisation has been entrusted with the work of data collection. The wage rate data are being collected along with rural retail prices from 600 sample villages spread over 66 NSS regions of 20 States by canvassing Block-5 (Annexure-I) of Schedule 3.01(R). The data collection from these sample villages is staggered over the four weeks of a month with one-fourth of them being covered every week. The days of canvassing of Schedule 3.01(R) are fixed. The village functionaries like the Panchayat Secretary, Progress Assistant, Patwari and other Village or Block Officials are the primary informants for collection of data on wage rates. The data on normal working hours and the prevailing wage rates in cash and kind for the reported working hours are collected sex-wise for each of the 18 selected occupations in 20 states, indicates an old document of the Labour Bureau.   

The wage rates are sometimes reported for a duration that is less/more than the normal working hours. In such cases, they are first normalised for eight hours working day. As regards the mode of payment of wages, it is made in both ways i.e., in cash and/or in kind. The payments made in kind are very common in rural areas, which include foodgrains, cooked food, tea, fuel, cigarette, beedi, fodder, etc. The wages reported in kind are evaluated at local retail prices. Thereafter, the data is thoroughly scrutinised and discrepant points are referred back to the field for clarification. In the next stage, the simple arithmetic average of these normalised daily wage rates is worked out occupation-wise and sex-wise for each state.

Up to June 2000, the average wage rates at the national level were derived by taking the simple average of state figures; since July 2000, the averages have been obtained by dividing the sum total of wages of all 20 states by the number of centres or villages from which data were collected. The state-wise averages are restricted only to those occupations where the number of centres is five or more to avoid abnormal fluctuations and inconsistency in wages paid to different categories of workers on account of varying numbers of centres. However, in order to calculate the all-India averages, all neglected centres are taken into account to arrive at the total number of centres at the national level.

The Reserve Bank of India (whose data we have used in writing this news alert) has collated and is releasing monthly time series data on rural wage rates based on the data published by the Labour Bureau, Government of India. Starting from November 2013 the Labour Bureau is collecting the rural wage data in respect of 12 agricultural and 13 non-agricultural occupations across 20 major states, namely, Andhra Pradesh, Assam, Bihar, Gujarat, Haryana, Himachal Pradesh, Jammu & Kashmir, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Manipur, Meghalaya, Orissa, Punjab, Rajasthan, Tamil Nadu, Tripura, Uttar Pradesh and West Bengal. The occupations for which the daily wage rates are collected every month are: (A) Agricultural occupations – (1)  Ploughing/ Tilling workers, (2) Sowing (including planting/ Transplanting/ Weeding) workers, (3) Harvesting/ Winnowing/ Threshing workers, (4) Picking workers (including Tea, Cotton, Tobacco and other commercial crops), (5) Horticulture workers (including nursery growers), (6) Fishermen-inland, (7) Fishermen coastal/deep-sea, (8) Loggers and wood cutters, (9) Animal husbandry workers (including poultry workers, dairy workers and herdsman), (10) Packaging labourers, agriculture, (11) General agricultural labourers (including watering/ irrigation workers, etc.), (12) Plant protection workers (applying pesticides, treating seeds, etc.); and (B) Non-agricultural occupations – (13) Carpenter, (14) Blacksmith, (15) Mason, (16) Weavers, (17) Beedi makers, (18) Bamboo, cane basket weavers, (19) Handicraft workers, (20) Plumbers, (21) Electrician, (22) Construction workers (for roads, dams, industrial & project construction work and Well diggers), (23) LMV & Tractor drivers, (24) Non-agricultural labourers (including porters, loaders), and (25) Sweeping/cleaning workers. 

References 

Handbook of Statistics on Indian States 2020-21, released in November 2021, please click here to access

State-wise Average Daily Wage Rates in Rural India (Men - General Agricultural Labourers), RBI Handbook of Statistics on Indian States 2020-21, released in November 2021, please click here to access 

State-wise Average Daily Wage Rates in Rural India (Men - Non-Agricultural Labourers), RBI Handbook of Statistics on Indian States 2020-21, released in November 2021, please click here to access 

State-wise Average Daily Wage Rates in Rural India (Men - Construction Workers), RBI Handbook of Statistics on Indian States 2020-21, released in November 2021, please click here to access 

State-wise Average Inflation (CPI) - Inflation, RBI Handbook of Statistics on Indian States 2020-21, released in November 2021, please click here to access 

Indian Labour Journal, February 2013, please click here to access  

Wage Rates in Rural India 2003-04: Methodology for Compilation of the Wage Rate Data, Labour Bureau, please click here to access    

Average Daily Wage Rates in Rural India: Methodology and coverage (From November 2013), Reserve Bank of India, please click here and here to access 

Consumer Price Index Numbers on Base 2012=100 for Rural, Urban and Combined for the month of January 2022, Ministry of Statistics and Programme Implementation (MoSPI), National Statistical Office (NSO), released on 14th February 2022, please click here to access 

Methodology of Data Collection Unsuited to Changing Rural Reality: A Study of Agricultural Wage Data in India -Yoshifumi Usami, Arindam Das, and Madhura Swaminathan, Review of Agrarian Studies, Vol. 10, No. 2, July-December, 2020, please click here to access

Russia-ukraine crisis to push up fertiliser prices, govt subsidies, IANS/ Business Standard, 4 March, 2022, please click here to access  

Cooking oil prices spike in India due to Russia-ukraine crisis -B Krishna Mohan, TelanganaToday.com, 3 March, 2022, please click here to access  

Govt reviews cooking oil imports as ukraine crisis disrupts supplies, prices shoot up -Amiti Sen and Prabhudutta Mishra, The Hindu Business Line, 4 March, 2022, please click here to access  

India's Economy Faces A Potential Stagflation Risk From Ukraine War -Sunil Prabhu, NDTV.com, 1 March, 2022, please click here to access

India to be one of Asia’s ‘biggest losers’ from the Ukraine war as Russia slammed by global sanctions -Paran Balakrishnan, The Telegraph, 1 March, 2022, please click here to access

Crude Oil Prices Rise, Tracking Russia-Ukraine Conflict -Rahul Karunakar, NDTV.com (with inputs from Agencies), 1 March, 2022, please click here to access

Cooking Oil May Become Costlier Due to Russia-ukraine War. Know Why, News18.com, 27 February, 2022, please click here to access  

Image Courtesy: Inclusive Media for Change/ Shambhu Ghatak



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