India Wage Report: Do casual workers earn more in economically-advanced states?

It is not unusual to expect that more economically advanced states will offer better wage rates for casual workers. However, a quick look at the International Labour Organisation’s (ILO) India Wage Report 2018 suggests otherwise. The report co-related each state’s per capita income with the wages for urban and rural workers and found that only Haryana matched expectations.

The report has debunked the thought that richer states provide better wages, Hindu BusinessLine reported.

The report gains significance now as India is in the midst of a massive reverse migration with workers returning to their home states due to the coronavirus and many losing their jobs. This has brought to the fore the income factor of these workers who move away from home to bigger cities in more developed states hoping to make a better living.

“There appears to be little association between the wages of regular workers (urban or rural) and the economic performance of a state,” the report notes, and acknowledging the situation as “puzzling” and warranting “further investigation.”

The report found that in the urban area, among India’s ‘economically developed states’ Haryana was the stand out with a high average wage against per capita income; followed by Assam, Jharkhand and then state Jammu & Kashmir (now separate Union Territories of Jammu and Kashmir, and Ladakh).

Notably, these three states are considered among the lower economically developed ones, especially in comparison with Himachal Pradesh, Punjab, Gujarat and Tamil Nadu – where ironically average wage was lower than regular urban workers.

The pattern continued for rural areas as well, with (then) Jammu & Kashmir, Bihar and Jharkhand posting better average wages per capita against bigger states such as Punjab, Gujarat, Karnataka and Tamil Nadu.

In terms of wage amounts, states with lower economic development also tended to pay lower – with a few variations. For example, economically developed Kerala paid high wages (urban and rural) for casual work, compared to regular wages. “This is probably a reflection of institutional factors, which, surprisingly, one does not observe for regular wages,” the report adds.

Institutional factors include minimum wage policies and human development levels.