❈ ❈ ❈

Part 1. The Covid-19 Pandemic and Wages of Casual Workers

We are increasingly in an economy in which policy making occurs as shooting into the dark, simply because we no longer have so much of the data that are essential for any public intervention. The collapse of the most essential statistical information in a country that pioneered the collection and evaluation of economic and other data in largely informal economic settings is more than troubling. It amounts to not just a tragic decline in a once-proud statistical system, but a real obstruction to any evidence-based policy making, and even a lack of awareness of the actual conditions of the Indian people.

For example, we have no reliable estimates of people’s consumption and therefore of poverty and inequality. The large consumer expenditure surveys of the National Sample Survey Organisation (NSSO) that enabled such measures were meant to be conducted every five years, and there was even talk of making the large surveys annual. However, the latest survey in 2017-18 was rejected by the government even after it had been approved by the National Statistical Commission, and the results were never officially made public. (A leaked version of the prepared report suggested that rural consumption spending had fallen between 2011-12 and 2017-18.) It could be expected that the government would immediately get a new survey done, but this has not occurred even to date. So the latest reliable information we have on household spending is for 2011-12, that is as long as twelve years ago!

We don’t even know how many people there are in the country, or their age or gender, or where they live or what they do or what basic conditions they live in. This is because the decennial Census has been postponed, supposedly because of the pandemic, but now indefinitely without any clear date being set. As a result, policy makers and implementers are forced to rely on extrapolations from the last census that occurred in 2011, which is a dubious and potentially misleading measure. The major upheavals that have occurred in economy, polity and society would have had significant impact on demographic trends, but as of now we simply do not know.

In consequence, we also do not know how the pandemic, the lockdowns and the subsequent increase in food and fuel inflation have affected people’s consumption and income poverty. Micro surveys and family health surveys point to worsening nutritional indicators, but we simply do not have the large scale survey data that would enable a more general sense of the conditions.

The only major source of information from large sample surveys that remains is from the Periodic Labour Force Surveys of the NSSO. These are now conducted over rounds spread over four quarters of the year, and provide data on employment rates, unemployment rates and remuneration. These enable us to get at least some sense of what is happening in labour markets and to wages, salaries and income from self-employment.

Casual workers are widely seen to be the worst affected during the Covid-19 pandemic, so it is worth exploring the changes in wages of casual workers just before, during and after the pandemic. In these figures, we have used the quarterly wage data from the Annual Reports of the Periodic Labour Force Surveys, deflated by the Consumer Price Index for rural and urban workers, respectively. The data provided here present trends in real wages, in terms of prices of the base period of July-September 2018.

Figure 1

Figure 1 presents data on trends in real wages of casual workers (other than those engaged in public works) by rural and urban location. It shows several features of interest. First, real wages in both rural and urban areas had started declining well before the pandemic, declining by more than 9 per cent in rural areas between January-March and July-September 2019, and by just under 6 per cent in urban areas. Of course the pandemic impacted labour markets drastically, with wages declining through 2020, and especially sharply in October-December 2020. Remember that this was the period when lockdowns had been largely lifted, but the negative multiplier effects of the closures and associated decimation of small and micro enterprises was fully in play.

Thereafter real wages recovered—more so in rural areas but remained relatively stagnant after the initial bounce back in early 2021. As a result, in the quarter April-June 2022, real wages of rural casual workers were less than 6 per cent higher than the earlier peak achieved in January-March 2019, while urban casual workers’ wages had only increased by 1.2 per cent. Note that over this period, GDP in constant terms is supposed to have increased by around 11 per cent, according to the CSO.

Figure 2

Figure 3

Figure 2 show the real wage trends disaggregated by gender. These show a similar pattern, of decline starting before the pandemic, extreme decline during the pandemic and only sight recovery in the most recent period. It is interesting that the wage recovery for male casual workers has been even less than that for women workers. In April-June 2022, male casual workers wages in constant price terms were only 1.5 per cent higher than in the previous peak of January-March 2019, while those of women casual workers were higher by 5.2 per cent.

This is reflected in the reduction of the gender wage gap, as indicated in Figure 3, which shows female wages as a per cent of male wages. Remember that India has one of the highest gender wage gaps in the world, so even with the recent increase, the gap is still larger than the world average. However, it is also the case that the recent period has seen a further decline in women’s recognized work force participation from already very low levels. It is possible that even among casual workers, the rise in average wages reflects the fact that fewer women at the bottom of he wage spectrum were able to retain their employment or find work.

Figure 4

Another aspect worthy of note is the apparent convergence across rural and urban areas in terms of wages, as indicated from Figure 4. This is more marked for male workers than female workers. This is clearly a feature that deserves further exploration about possible causes as well as regional variations.

Overall, the broad tendency that emerges is that of wage movements that are not keeping pace with GDP increases, pointing to worsening bargaining power of casual workers and in providing one more indication of increasing economic inequality within the country.

❈ ❈ ❈

Part 2. Self-Employed Workers in India

Well over half of all workers in India are self-employed. The proportions of self-employed workers are significantly higher in rural areas, and among women. In rural areas, it is presumed that it is the dominance of small-scale agriculture that leads to more self-employment, but in fact self-employed workers are around half of those engaged in non-agricultural employment as well. Even in urban areas, those working without any defined employer account for around two-fifths of male workers and more than one-third of the proportion of women in some form of paid employment.

Remember that self-employment in most cases in India (other than in farming, some small family enterprises and skilled professionals able to work on their own terms) is rarely a choice. Rather, it reflects the absence of good quality paid employment, or in extreme situations, the lack of any paid employment at all.

This is because such work is typically difficult, risky and low-paid. Self-employed workers bear all the risks of production, including relative price movements and changes in market conditions. They are also responsible for their own safety at work. They have to deal with a generally oppressive state at different levels, and often pay extra to local officials simply to function. Small and micro enterprises usually also find it extremely hard to access credit and have to procure inputs on less favourable terms.

As became particularly evident during the Covid-19 pandemic, they also lack any form of social protection, other than various “universal” provisions provided by governments at central and state levels. The most obvious protection is for those covered under the National Food Security Act, who received some free food rations—but even this did not cover tens of millions of such workers and their families. The lack of any compensating transfers from governments during the period of huge social and economic upheaval and distress was therefore especially devastating for self-employed workers.

This also means that the incomes they earn from their work are absolutely critical in ensuring anything close to a minimally decent existence. Yet remuneration from self-employment, on average, tends to be even lower than that from salaried or wage employment. This makes is a matter of great concern that remuneration from self-employment has not just stagnated but even declined over the past three years.

In Part 1 of this article above, we have examined trends in real wages of casual workers in rural and urban India and found that these wages had started declining before the Covid-19 pandemic. Obviously, they then fell sharply during the pandemic and since then they have recovered only slightly. Quarterly average wages in April-June 2022 were only slightly above the pre-pandemic peak.

Unfortunately, the story is even worse for self-employed workers. (As was done for wages of casual workers, in Figures 1-3, the money incomes data taken from the Periodic Labour Force Surveys have been deflated by the CPI for rural and urban workers, respectively, to arrive at real wages in terms of the base of July-September 2018.)

Figure 1 shows that real remuneration from self-employment peaked in April-June 2019, and started falling thereafter well before any pandemic-related economic disruptions. The pandemic and the lockdowns did lead to sharp declines in such incomes, particularly in urban India, where they fell by 20 per cent in April-June 2020 compared to the previous quarter, and were 30 per cent below the earlier peak. What is more, the recovery since then has not led to achieving the earlier levels. In April-June 2022, real remuneration of urban self-employed workers was still 11 per cent lower than in April-June 2019. In other words, self-employed workers in urban India in mid-2022 on average were earning significantly less than they had earned three years earlier!

Figure 1

Source for all figures: Periodic Labour Force Surveys, NSSO,

deflated by CPI (rural and urban).

In rural India, remuneration of self-employed workers peaked in January-March 2019. Note that rural earnings from self-employment are significantly lower than in urban areas, with a gap of around 40 per cent between the two. Even these abysmally low incomes fell further during the first lockdown phase, falling by 7.5 per cent from the previous quarter, and by 11 per cent compared to the previous peak. By the most recent period for which data are available, April-June 2022, incomes from self-employment in rural India were on average still 2 per cent lower than they had been more than two years earlier. This, despite the much-vaunted increase in agricultural output that has been hailed as an indicator of India’s economic resilience.

Figure 2

Figure 3

Figures 2 and 3 break up these earnings in rural and urban India by gender. The horrifying result is that the gender gap in workers’ incomes already one of the highest in the world in paid employment turns out to be even greater for self-employment. And the gaps have actually increased even further in recent years. In rural India, women in self-employment have earned only around 45 per cent of what their male counterparts have earned. The ratio of women’s earnings to men’s earnings also fell sharply over this period, from a peak of 51 per cent in October-December 2019 to as low as 39 per cent in April-June 2022.

In urban India the situation of women self-employed workers is even worse. They have earned on average less than 42 per cent of what men workers earned per month. Once again, matters deteriorated over this period, with the ratio of women’s earnings to men’s earnings falling from 47 per cent in April-June 2020 (a peak only reflecting the bigger fall in men’s incomes in that lockdown quarter) to less than 40 per cent in April-June 2022.

All of this is clearly depressing in its own terms, but it also suggests a very different picture of the Indian economy from that presented in official handouts and in the superficial but glowing estimates of some global business media. An economy cannot be booming if the majority of its recognised workers are facing lower wages and worse conditions. Sharp increases in economic inequality may conceal these tendencies in the aggregate macroeconomic data for a while, but eventually this stagnation or deterioration of workers’ incomes, which necessarily implies lower mass consumption demand, must also affect economic activity and investment. It is unfortunate that this most essential truth remains unrecognised by Indian policy makers.

(C. P. Chandrasekhar was Professor at the Centre for Economic Studies and Planning, Jawaharlal Nehru University, New Delhi. Jayati Ghosh is Professor of Economics at the University of Massachusetts Amherst, USA. Courtesy: Ghosh’s blog at networkideas.com. Both articles Courtesy: Business Line and the authors’ blog at networkideas.org.)