Salaried workers' real wages dropped between 2012 and 2022: ILO study

Over the decade until 2022, the average monthly real earnings of regular salaried workers declined by 1 per cent each year, according to the latest report jointly prepared by the International Labour Organization (ILO) and the Institute for Human Development (IHD), pointing towards poor-quality employment and the possible adverse impact of the pandemic.

The average real monthly wage of a regular wage worker has dipped to Rs 10,925 in 2022 from Rs 12,100 in 2012, as calculated by the ILO using official government data.

Wages in urban areas have decreased faster than in rural areas to Rs 12,616 in 2022 from Rs 13,616 in 2012, compared to Rs 8,623 in rural areas from Rs 8,966 over the same period, according to the India Employment Report 2024 released last month.

Regular wage or salaried workers are those who engage in relatively longer tenures of work and are usually paid wages or a salary on a weekly or monthly basis. This category includes government employees, Accredited Social Health Activist (ASHA) workers, domestic helps, guards, and individuals working in the vast private sector, generally considered to be a better form of employment.

Alakh N Sharma, director of IHD, states that government employees comprise only a minuscule proportion of regular workers, and while their salaries may have increased, it is largely private sector employees who are experiencing stagnation in their wages.

“One factor is that many low-skilled regular workers like guards and household help are experiencing stagnation in their earnings as their employers are not increasing their wages proportionately. Another factor is that the growth in the private sector, which is mainly situated in urban areas, has not translated into higher wages for its workers,” he added.

According to the report, among regular workers, nearly 39 per cent earned real wages between Rs 5,001 and Rs 10,000 in 2022, followed by nearly 23 per cent earning Rs 2,001 to Rs 5,000. Only 14.9 per cent of regular workers earned more than Rs 20,000 in 2022, down from 17.1 per cent in 2012.

Similarly, the report notes that the average real earnings of self-employed individuals declined annually by 0.8 per cent to Rs 6,843 in 2022 from Rs 7,017 in 2019. Meanwhile, the real monthly wages of casual workers have increased by an average of 2.4 per cent to Rs 4,712 in 2022 from Rs 3,701 in 2012.

Self-employed workers constitute the most heterogeneous category and the largest category (nearly 55 per cent) of workers in India, consisting of professionals like doctors, teachers, lawyers, agricultural labourers, vendors, hawkers, owners of small businesses, and unpaid helpers working in household enterprises, while casual workers are those who do not have any tenure and are mostly employed on a daily wage basis, such as National Rural Employment Guarantee Act (NREGA) workers, industrial labourers, construction workers, or individuals doing odd jobs at odd times.

“The earnings of self-employed workers declined mainly due to the pandemic shocks. Professionals primarily reside in urban areas, and the pandemic has affected them more as they witnessed a decline in earnings due to frequent lockdowns. On the other hand, the modest increase in the earnings of casual workers in the past decade is mainly due to targeted government policies and social transfers like free food programmes, pension schemes, and higher allocations to NREGA. It is more reflective of government support and subsidies. The rise in the wages of casual workers is crucial for poverty eradication and development, and their wages in India have generally been rising since the 1980s, surprisingly not declining during the pandemic as well,” Sharma added.

The report also noted that at the national level, 40.8 per cent of regular workers and 51.9 per cent of casual workers did not receive the average daily minimum wage prescribed by the government for unskilled workers in the agriculture sector, whereas 39.3 per cent of regular workers and 69.5 per cent of casual workers engaged in the construction sector did not receive the average daily minimum wage.