MGNREGA scheme led to decline in gender wage gap in rural India: ILO

The introduction and expansion of the rural employment guarantee scheme - Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA)--has led to a decline in gender wage gap and increased compliance with the minimum wage regulations in rural areas, International Labour Organisation (ILO) noted in its latest working paper that looked at the employment and wage disparities between rural and urban areas.

Besides, the paper also noted that the gap in rural wages between formal salaried workers and casual workers also decreased due to the employment guarantee scheme.

“As NREGS was introduced and expanded, the rate of compliance with minimum wage regulations increased, the gap in rural wages between formal salaried workers and casual workers decreased and, similarly, the gender wage gaps in rural areas declined. Alongside other factors, the NREGS programme seems to have played an important role in these positive trends,” the paper said. 

Meanwhile, the ILO also notes that the results varied across the national territory and its potential to transform the lives of rural populations depended on its implementation at the field level.

Further, the working paper also notes that there have been negative trends in the purchasing power of rural Indian wages in recent years.

“Drawing on inflation data, together with the rural monthly wage index published by the Indian Labour Bureau, the Ministry of Finance has observed negative trends in the purchasing power of rural Indian wages in recent years. Thus, in its Economic Survey 2022– 23, the Ministry highlighted a negative growth in real rural wages (that is, rural wages adjusted for inflation) due to elevated inflation between April and November 2022,” it says.

The working paper by the ILO looked at the statistical evidence from 58 countries to show that although people in rural areas are more likely to be in employment than those in urban ones, they tend to have jobs that can put them at risk of experiencing inadequate labour protection as well as low pay.

“In particular, rural workers are paid, on average, 24 per cent less than their urban counterparts on an hourly basis, and only half of this gap can be explained by rural–urban discrepancies in education, job experience and occupational category. Institutional and regulatory frameworks, notably those that set minimum wages or seek to promote equal opportunities, can help to reduce labour market-related inequalities across the rural–urban divide,” it says.

Rural-Urban divide

> Latest working paper looked at the employment and wage disparities between rural and urban areas

> Rural workers are paid, on average, 24% less than their urban counterparts on an hourly basis

> Working paper also notes that there have been negative trends in purchasing power of rural Indian wages