Problem of wages
Jasvir Singh
It is believed that India’s mass poverty is on account of its ‘high unemployment rate’. The solution to poverty, it is argued, lies in reducing unemployment. The National Rural Employment Guarantee Act, 2005, is based on this flawed bit of reasoning.
People are poor despite being in work. According to the 2001 Census, there were 402 million workers in a total population of 1,027 million, or a work participation rate (WPR) of 39 per cent, which cannot be said to be low. A proportion of 23.6 per cent of the urban population lives below the poverty line, whereas rural poverty is 27.1 per cent. However, a much higher proportion of the rural population is working, compared to the urban population. The WPR in rural areas is 41.8 per cent, whereas in urban areas it is 32.2 per cent.
If poverty were due to unemployment or fewer people at work, rural India would be less poor than urban India. In two states (Kerala and Tamil Nadu) where unemployment rate (more than 10 per cent) rules above the national average, the proportion of people living below the poverty line is lower than the national average. In West Bengal, both unemployment and poverty levels are higher than the national average. However, in Bihar, Orissa and Uttar Pradesh, unemployment rate is less than 8 per cent, but the proportion of people living below the poverty line is higher than in the three states where unemployment rate was the highest in India.
One of the most important causes of mass poverty is that a large proportion of workers get inadequate income or wages for their work. A family remains poor even when two persons in a family of six are working. People who work should get at least that much income with which they can purchase all the basic goods and services required for a dignified human existence for themselves and their dependent family members.
A working population of 402 million in a total population of 1,027 million implies that each worker supports at least two other members of his family. These 402 million produced goods and services worth Rs 20,81,474 crore in 2001. If this total GDP were to be equally distributed among all these 402 million working citizens, the share of each worker would be Rs 51,778 per annum.
This amount of Rs 51,778 per worker per annum, if divided among all three members of his family, would leave each family member with Rs 17,259 per annum to spend on basic requirements of life. This amount of Rs 17,259 per person per annum would have kept all Indians much above the official poverty line, of Rs 3,942 per person per annum for rural people and Rs 4,563 per person per annum for urban people in the year 2000.
The 260 million people in India who were said to be living below the poverty line in year 2000 were not getting even Rs 3,942 per annum in rural areas and Rs 4,563 per annum in urban areas.
In a well-functioning society, there ought to be a relationship between minimum wages, poverty line and dignified living conditions. According to the report of the Second National Commission on Labour, 2002, ‘‘One seeks employment so that one can attain a ‘decent’ or dignified standard of living. The wages or income that one obtains from one’s work is... what enables one to achieve a fair standard of living’’. A minimum wage for all workers should be fixed in such a way that all the workers and their dependent family members should be able to live above the poverty line. The poverty line should be fixed in such a way as to guarantee a dignified existence to all. But the official poverty line in India is fixed in such a way as not to allow a person the basic requirements of life.
There is no coherent incomes and price policy in India. Some ‘workers’ — government and bank employees — get wages or salaries that are almost nine times the per capita income, while a majority does not get even two-fifths (or 40 per cent) of India’s per capita income.
There has been no debate in India on how wages and salaries of workers in general are fixed and how they ought to be fixed.Hence, those getting more than nine times India’s per capita income as wages and salaries unashamedly demand more wages/salaries for themselves in the name of ‘justice’.
So what are poverty alleviation schemes, including employment guarantee schemes, past and present, up to?
Jasvir Singh
It is believed that India’s mass poverty is on account of its ‘high unemployment rate’. The solution to poverty, it is argued, lies in reducing unemployment. The National Rural Employment Guarantee Act, 2005, is based on this flawed bit of reasoning.
People are poor despite being in work. According to the 2001 Census, there were 402 million workers in a total population of 1,027 million, or a work participation rate (WPR) of 39 per cent, which cannot be said to be low. A proportion of 23.6 per cent of the urban population lives below the poverty line, whereas rural poverty is 27.1 per cent. However, a much higher proportion of the rural population is working, compared to the urban population. The WPR in rural areas is 41.8 per cent, whereas in urban areas it is 32.2 per cent.
If poverty were due to unemployment or fewer people at work, rural India would be less poor than urban India. In two states (Kerala and Tamil Nadu) where unemployment rate (more than 10 per cent) rules above the national average, the proportion of people living below the poverty line is lower than the national average. In West Bengal, both unemployment and poverty levels are higher than the national average. However, in Bihar, Orissa and Uttar Pradesh, unemployment rate is less than 8 per cent, but the proportion of people living below the poverty line is higher than in the three states where unemployment rate was the highest in India.
One of the most important causes of mass poverty is that a large proportion of workers get inadequate income or wages for their work. A family remains poor even when two persons in a family of six are working. People who work should get at least that much income with which they can purchase all the basic goods and services required for a dignified human existence for themselves and their dependent family members.
A working population of 402 million in a total population of 1,027 million implies that each worker supports at least two other members of his family. These 402 million produced goods and services worth Rs 20,81,474 crore in 2001. If this total GDP were to be equally distributed among all these 402 million working citizens, the share of each worker would be Rs 51,778 per annum.
This amount of Rs 51,778 per worker per annum, if divided among all three members of his family, would leave each family member with Rs 17,259 per annum to spend on basic requirements of life. This amount of Rs 17,259 per person per annum would have kept all Indians much above the official poverty line, of Rs 3,942 per person per annum for rural people and Rs 4,563 per person per annum for urban people in the year 2000.
The 260 million people in India who were said to be living below the poverty line in year 2000 were not getting even Rs 3,942 per annum in rural areas and Rs 4,563 per annum in urban areas.
In a well-functioning society, there ought to be a relationship between minimum wages, poverty line and dignified living conditions. According to the report of the Second National Commission on Labour, 2002, ‘‘One seeks employment so that one can attain a ‘decent’ or dignified standard of living. The wages or income that one obtains from one’s work is... what enables one to achieve a fair standard of living’’. A minimum wage for all workers should be fixed in such a way that all the workers and their dependent family members should be able to live above the poverty line. The poverty line should be fixed in such a way as to guarantee a dignified existence to all. But the official poverty line in India is fixed in such a way as not to allow a person the basic requirements of life.
There is no coherent incomes and price policy in India. Some ‘workers’ — government and bank employees — get wages or salaries that are almost nine times the per capita income, while a majority does not get even two-fifths (or 40 per cent) of India’s per capita income.
There has been no debate in India on how wages and salaries of workers in general are fixed and how they ought to be fixed.Hence, those getting more than nine times India’s per capita income as wages and salaries unashamedly demand more wages/salaries for themselves in the name of ‘justice’.
So what are poverty alleviation schemes, including employment guarantee schemes, past and present, up to?