Rural workers’ earnings grew at quickest pace in 5 years in Q1: Survey
The monthly earnings of regular workers in rural areas grew sharply by 11.6% year-on-year in the April-June quarter of the current financial year, the fastest rate in at least five years.
While this was revealed by the latest periodic labour force survey (PLFS) annual report, the unemployment rate in rural India in 2022-23 (July-June) was also the lowest in five years at 2.4%. This augurs well for rural consumption.
However, the regular workers’ monthly earnings growth is in contrast with that of casual workers, whose monthly earnings showed a modest growth rate of 5.2% year-on-year in April-June, which is the second lowest in the past five years.
In Q12019-20, the quarter in which a nationwide lockdown was imposed, growth in monthly earnings of rural casual workers had slipped to 2.2%, but in the subsequent two years, the growth soared to 11.2% and 16.1%, respectively.
The PLFS defines regular workers as persons who worked in others’ farm or non-farm enterprises (both household and non-household) and, in return, receive salary or wages on a regular basis. Whereas, casual workers are the ones who receive wages according to the terms of the daily or periodic work contract.
Casual workers, in particular, constitute the workers who have been employed under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA).
“The MGNREGA wage rose sharply during the pandemic and then has settled at a modest level thus lowering the growth rate. Therefore casual workers get a deal equivalent to that of MGNREGA,” said Madan Sabnavis, chief economist, Bank of Baroda.
“For regular workers there was a tendency for wages to go up since the supply of labour came down due to urban migration which pushed them up. These are typically workers with skill sets unlike casual who are unskilled and hence get tagged to MGNREGA which is also not skill-based,” he said.
However, former member of PM’s Economic Advisory Council Surjit Bhalla said, “since 2011 onwards, there has been hardly any increase in the real earnings of salaried workers, whereas, casual workers have shown a large increase in earnings per annum. The data for just one year (2022-23) doesn’t show a true picture.”
As per the labour bureau, real wages in rural India were at the lowest in 16 months in March, 2023. The labour bureau publishes wage data for ploughing/tilling and sowing workers.
Bhalla observed that the labour bureau data on real wages is not “meaningful.”