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| Two different things | | MGNREGA is not a jobs scheme, but a safety net |
| Business Standard / New Delhi Jan 26, 2012, 00:24 IST |
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The controversy over wages paid under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) is getting knottier by the day. Social activists, as also the National Advisory Council (NAC) headed by Congress president Sonia Gandhi, have always favoured aligning MGNREGA payments with the prescribed minimum wages in different states. The government has, however, avoided doing so, maintaining that MGNREGA is a social security measure, not a substitute for the existing employment opportunities — and hence need not follow the minimum wage norms. But the issue has now been confounded with the Karnataka High Court recently ruling that the remuneration under the statutory MGNREGA scheme cannot be lower than the minimum wage. This has lent a legal dimension to the controversy, besides adding to the Centre’s discomfiture, as the payment of minimum wages will escalate the cost of running this scheme by anywhere between 17 and 30 per cent over and above the Rs 40,000 crore already being spent annually on it. Besides, it will serve as an incentive for the state governments to hike the minimum wages at will to draw more resources from the Centre. Now, the Supreme Court too has refused to stay the Karnataka High Court order.
The only course left for the Centre appears to be to amend both the employment guarantee legislation as well as the Minimum Wages Act to concretise its right to fix the MGNREGA payments irrespective of the minimum wages notified by the state governments. Indeed, the Centre is partly itself to blame for its current dilemma by not stating in the original Act that it would override all other statutes in terms of wage fixation. Besides, it has let the mandate of the MGNREGA scheme be diluted by studying attempts to tie its wages to the consumer price index for rural labour, and permitting MGNREGA workers to carry out works under the Member of Parliament Local Area Developmental (MPLAD) scheme.
What has, clearly, been relegated to the background is the fundamental fact that a subsistence mechanism is not a jobs scheme per se. The original MGNREGA was formulated in a manner that it caused the desperately poor, the target of the scheme, to self-select as beneficiaries. The wages were set in a way that individuals unable to find work elsewhere would be assured at least the MGNREGA wage. The logic underlying this, is, of course, completely different from the regulatory logic underlying minimum-wage legislation. If the difference is lost sight of, not only will rural labour markets be warped, but the MGNREGA itself will lose its effectiveness as a targeted scheme. The work on the employment-guarantee scheme is not subject to the efficiency-inducing rules of the market — and so cannot substitute for the productivity of rural labour markets. It is a necessary safety net, not a productivity- or skill-enhancing scheme. By trying to tie it ever closer to the rural labour markets, agricultural growth will be hit — and nobody will be hurt more by that than the rural poor. This essential distinction must be kept in mind. Thus, the government has to amend both laws to be able to keep MGNREGA wages at levels that, even while ensuring subsistence for the jobless, do not cannibalise the existing labour market or alter the basic character of the scheme.
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