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Growth, structural change and wages in India: recent trends

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Abstract

This paper attempts to analyse the trend in growth rate of wages in the last two decades. The broad trend in wages and the wage structure are examined in the context of changing structure of employment and output in the economy over time using different data sources. The rapid acceleration during 2008–2013 and subsequent collapse of wages has raised questions on the earlier consensus on drivers of change in agricultural wages. The emergence of non-farm sector and the declining importance of agriculture is examined along with the new patterns of rural-urban interlinkages, public expenditure led employment creation such as MGNREGA and wage-inflation spiral.

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Fig. 1

Source: Wage Rates in Rural India, Labour Bureau, Shimla

Fig. 2

Source: Wage Rates in Rural India, Labour Bureau, Shimla

Fig. 3

Source: Wage Rates in Rural India, Labour Bureau, Shimla

Fig. 4

Source: Wage Rates in Rural India, Labour Bureau, Shimla

Fig. 5

Source: Wage Rates in Rural India, Labour Bureau, Shimla

Fig. 6

Source: Wage Rates in Rural India, Labour Bureau, Shimla

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Notes

  1. See Bhalla (1979, 1993)

  2. For details on rural wage estimates, see Himanshu (2005).

  3. Even though the 64th round (2007-08) is not part of the quinquennial round of NSSO, the sample size of this round for the employment unemployment surveys is same as that of any quinquennial round of NSSO. Also, the survey sampling methodology is consistent with other quinquennial rounds, justifying the use of this round as part of the series.

  4. The nominal wage figures were deflated by the respective state-wise Consumer Price Indices for agricultural Labourers (CPIAL) for deflating rural wages and Consumer Price Index for Industrial Workers (CPIIW) for urban wages in order to arrive at the figures for real wage rates. The CPIAL and CPIIW for each state are provided by the Labour Bureau, Shimla, on a monthly basis and is published every month in the Indian Labour Journal.

  5. This trend has remained roughly unchanged since 1999-00 and it is not unusual to treat regular wages as representative of urban wages and casual wages representative of rural wages.

  6. Ploughing was excluded because data for ploughing was not available in many states for females. Also, since ploughing wage rates are higher than wage rates for other agricultural operations, inclusion of ploughing has been avoided to make it comparable with unskilled wage work. The new series of wage data starting from November 2013 includes a separate category of general agricultural labour which has been used for analysis of data after November 2013.

  7. On advice of the National Statistical Commission (NSC), the Central Statistical Office (CSO) constituted a Working Group under the Chairmanship of Dr. T.S. Papola to deliberate on the issue of coverage of occupation category for collection of wage rate data. The group recommended 12 Agricultural Occupations and 13 Non-Agricultural Occupations as against existing 11 Agricultural and 7 Non-agricultural Occupations. Labour Bureau started the compilation, analysis and dissemination of wage rate data based on new categorization since November 2013.

  8. As far as possible, no attempt has been made to reconcile the two wage series but for the sake of presenting long term trend, the two data sets have been spliced to arrive at a common series. We have used the monthly growth rate from the two series to arrive at the wage rate for November 2013, which has been used as a linking factor to create a combined series.

  9. A comprehensive survey of the literature on regional variation and determinants of it is available in Himanshu (2006). Also see Himanshu and Kundu (2016).

  10. For details, see Himanshu, Jha and Rodgers (2016). Most of the village studies in the book report rise in agricultural wages in rural areas in the latter half of last decade.

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  1. Centre for Economic Studies and Planning, School of Social Sciences, Jawaharlal Nehru University, New Delhi, India

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Himanshu Growth, structural change and wages in India: recent trends. Ind. J. Labour Econ. 60, 309–331 (2017). https://doi.org/10.1007/s41027-018-0114-7

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