Cinderellas of growth

Economic growth did not result in higher wages for the Indian workforce even in the organised sector, and wage disparities widened as employers moved to the contractual employment pattern.

Published : Sep 26, 2018 12:30 IST

Members of Asha Karmi, or village health workers, at a demonstration outside the Odisha State Assembly demanding an increase in their remuneration and regularisation of their jobs, in November 2017. The Union government announced a hike in the remuneration of Anganwadi and ASHA workers on September 18, 2018, but the increased pay also falls far short of a living wage.

Members of Asha Karmi, or village health workers, at a demonstration outside the Odisha State Assembly demanding an increase in their remuneration and regularisation of their jobs, in November 2017. The Union government announced a hike in the remuneration of Anganwadi and ASHA workers on September 18, 2018, but the increased pay also falls far short of a living wage.

AMID claims of an increase in the gross domestic product (GDP) comes a report from the International Labour Organisation (ILO) portraying a rather dismal picture of the state of wages earned by the majority of the country’s workers. Released on August 20, the report “India Wage Report: Wage Policies for Decent Work and Inclusive Growth” depicts a worrisome picture of wages and employment in both the organised and unorganised sectors, more or less vindicating what the Left-led trade unions have been saying over the past two and a half decades.

The worrying part is that while many developing and emerging countries like Brazil and Russia endured economic recession and declining growth rates after 2010, it was not so in India. But higher or improved growth rates did not, by and large, translate into higher wages in India. That this has to do with the drastic changes in the nature of employment cannot be ignored. The report underscores that since the economic reforms of 1991, wage employment in the organised sector has increasingly become casual or contractual in nature and does not give employees access to social security and other benefits. Once hailed as a beacon for permanent employment seekers, the organised sector now has a large proportion of casual employees.

While economic reforms contributed to strong economic growth leading to a substantial decline in poverty, this was accompanied by shrinking employment in agriculture and a growing proportion of jobs in services and industry, the report says. Agriculture continued to be the dominant employer. But the nature of employment in agriculture, as in services and industry, was of a casual nature. The report relied on the Employment and Unemployment Survey (2011-12) of the National Sample Survey Organisation to arrive at an assessment regarding the areas and sectors where people were predominantly employed.

Employment in the organised sector grew, but it was mainly of a casual and informal nature, a feature that trade unions have been pointing out and even which industry associations do not dispute. The report squarely identifies low pay and wage inequality as serious challenges to India’s path to achieving decent working conditions and inclusive growth. Between 1993-94 and 2011-12, real average wages grew in rural India faster than they grew in urban India. Wages grew faster for casual labour than for those in regular employment; they also rose faster for women than for men.

But low wages remained pervasive with high levels of wage inequality. In 2011-12, the average wage was Rs.247 for regular employment, while for casual work it was Rs.143 only. Only a very limited number of regular or salaried workers in urban areas and highly skilled professionals earned substantially higher average wages. There was an urban-rural difference: daily wage rates in urban areas were found to be almost double those in rural areas. There was also inter-State disparity; wages rose faster in high-wage States. Interestingly, the report also draws a connection between wage levels and labour market institutions, minimum wages and collective bargaining. Despite a long history of trade unionism in the country, there was surprisingly no data on the extent of collective bargaining coverage in India. Collective bargaining as a phenomenon was associated more with large enterprises. There were two kinds of bargaining: at the centralised level in public sector institutions and at the plant level in the private sector. Union density showed a slight increase from 1993-94, though it was 10.7 per cent only. For women, such density was half of that of male workers. Clearly there were greater challenges in getting women to organise.

Loss of voice for labour

While the report is on wage levels in India, it weaves together various factors, for example, the extent of collective bargaining, trade union density, and even the participation of women that determine wage levels. Union density for salaried workers has fallen “precipitously”since 1993-94 by nearly 17.7 percentage points, while it rose for casual and self-employed sector workers, it says. The 1990s were particularly interesting: the economy opened up but there was also greater unionisation, or at least there was an environment for greater unionisation, given the peculiarity of the conditions necessary to sustain and implement a neoliberal regime. This was the period stretching into the mid 2000s when there were serial agitations by workers in several automobile majors.

For the past one decade, unions have been demanding a statutory floor-level minimum wage, which now should not be less than Rs.18,000 a month if indexed to inflation, they say. India, says the report, was first among developing countries to introduce a minimum wage policy. Yet, minimum wages are applicable only to 66 per cent of the wage workers and are confined to “scheduled” employment.

Contractual employment

Any increase in regular or salaried employment involves “work arrangements of a contractual nature”, short-term or fixed-term contracts, says the report, a fact that trade unions have also tried repeatedly to highlight. In the organised manufacturing sector, there was a sharp and sustained rise in the share of contractual workers—from 14 per cent in 1990-91 to 35 per cent in 2011-12. Regular and salaried employment without social security and other non-wage benefits grew at 9.2 per cent between 2004-05 and 2011-12. This pointed to the fragmentation of the organised economy into two classes of workers—one formal and the other informal without any non-wage benefits. In some sectors of the organised economy, like registered mining and quarrying, the proportion of casual workers was found to be as high as two-thirds of the total workforce.

The salaries in urban India rose between 1993-94 and 2004-05, fuelled by high economic growth and also because of the various pay commissions. The salaries of people in professional and administrative categories rose substantially. The principle of equal pay for work of equal value was also not observed anywhere as a rule. The gap was seen to be the lowest in the higher occupational ranks, like legislators, managers or senior officials. Women were over-represented in low-skilled occupations, accounting for 67 per cent of the female workforce in 2011-12, and received 69 per cent of what was on an average paid to men. The level of education and wages had a distinct correlation. Those with the highest level of education received five times the wages of those with the lowest level of education.

There were wide wage disparities between States. Kerala, Jammu and Kashmir, Punjab and Haryana had the highest rates of casual wages in both rural and urban areas. Uttar Pradesh, Assam, Madhya Pradesh, Chhattisgarh and West Bengal had the lowest casual wages. In rural areas, Odisha, Maharashtra, Chhattisgarh, Madhya Pradesh and Gujarat had the lowest rates of casual wages. This explains the huge concentration of migrant labourers in some States such as Kerala, Haryana, Jammu and Kashmir and Punjab. The report, however, says there is no correlation between high-performing States and wage rates. In some States, labour welfare boards had been set up mainly for the informal sector. Kerala had the highest number of such boards, which were occupation and sector specific. Central trade unions like the Centre of Indian Trade Unions, the All India Trade Union Congress and the Indian National Trade Union Congress also had formed forums like joint action committees to address issues of workers in exploitative occupations like brick-making and helped form unions. In Pune, waste pickers, domestic workers, head-loaders, autorickshaw drivers and construction workers were part of a Manual Labourers’ Association, which was recognised by the municipal authorities.

Wages remain depressed

Despite the Minimum Wages Act of 1948, and though the Constitution recognises that the state should move towards achieving a “living wage” to all, and though a Fair Wages Committee has been constituted for a framework to fix minimum wages, guaranteeing a basic minimum wage continues to be a challenge. Wage boards were constituted, including a statutory one for journalists and non-newsmen working in the newsprint industry, but the recommendations of wage boards—meant to fix wages on the basis of the needs of the worker and the industry’s capacity to pay—have hardly been implemented, with employers seeking legal recourse to avoid payment. The 15th Labour Conference laid down the norms for setting up minimum wages, which included three consumption units per worker; a minimum calorific requirement of 2,700 calories a day per consumption unit, a cloth requirement of 72 yards (65 metres) per annum per family, and a rent allowance which was equivalent to the government’s industrial housing scheme. Clearly, what was paid as minimum wage across the board was, barring a few exceptions, grossly inadequate to cover these minimum requirements. That ILC recommendations over the years have not been complied with is a matter of concern. This year, the Central government announced the date of the ILC only to postpone it indefinitely.

The National Commission for Enterprises in the Unorganised Sector had also proposed a statutorily backed national minimum wage along with a national minimum social security and minimum conditions of work to ensure the safety and health of workers—to no avail. The labour inspection systems are also weak, and compliance by employers is poor. While much has been made of late of electronic payments, the monitoring of such transfers is weak. Barring a few States like Kerala where awareness of trade union rights is high, apart from government commitment to ensure that wages are being paid electronically, monitoring by the labour department is practically non-existent. The report says that whether minimum wages reach low-paid workers depends on the level at which the minimum wage is fixed and on whether an enforcement machinery is in place. In an analysis of 11 developing countries, it was observed that compliance was higher in Latin American countries than in Asian countries. In Brazil, it was owing to a comprehensive enforcement strategy. In Vietnam and Mexico, it was argued that low minimum wage levels were responsible for compliance. In India, low compliance was observed in the case of women workers, rural workers, workers from certain castes, those engaged in agriculture and low-skilled services, and those in the informal sector. The extent of compliance in China, contrary to popular notion, was very high among Asian countries, due to penalties and fines and improved labour inspections, all three features glaringly absent in the Indian context.

Greater dissatisfaction

Cumulatively, all this has contributed to greater unrest and dissatisfaction among workers. By and large, protests by workers and other economically disadvantaged groups have been a regular feature over the past few years, with farmers and peasants taking to the streets demanding justiciable prices for foodgrains and agricultural wages. The demand for regular work has also been a steady one. The report says that there were 226 protests against privatisation, and also strikes, mostly led by left-wing trade unions. There were 37 campaigns led by the left-leaning CITU and AITUC and three by the INTUC and the Bharatiya Mazdoor Sangh, the trade union affiliates of the Congress and the BJP respectively. Unions ideologically close to the ruling parties have been compelled to make their positions clear on government policies that are seen as inimical to working-class interests. Despite fragmentation in terms of a multiplicity of unions, the ILO report acknowledges that trade unions have been successful in stalling changes in labour laws that have tried to introduce greater flexibility in the labour market. Employers have tried all tactics to break unions; they have offered incentives to workers not to join unions. Conciliatory tactics have been accompanied by intimidatory tactics, as in the case of a leading automobile major in Haryana. Some Supreme Court rulings have also added to worker isolation and victimisation. In 2006, workers and trade unions suffered a major setback after the court ruled that casual and temporary workers did not have the right to claim “permanent employment” as they were recruited “through the back door”.

Wages should be revised regularly, says the report. The absence of such revision has led to severe wage inequalities and sharp differences in emoluments drawn between various sections of the working population. Employers have ensured that collective bargaining and disaffection among workers are kept at a bare minimum by maintaining two categories of employees, regular and contractual. Weak compliance structures have added to simmering resentment across the board, as reflected in the violent outbreaks on shop floors. Recent movements demanding reservation are perceived as articulations of that resentment as people have begun to increasingly feel that government jobs, despite their dwindling number, are the only safeguard against arbitrary hire and fire in the private sector.

To that extent, wages and the nature of employment are inextricably related, and it is high time that GDP growth rates are reflected in better wages and living conditions for the people.

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