Issues with the minimum wage in India: Data on what Indians earn does have plenty to reveal of poverty

Source: The post issues with the minimum wage in India has been created, based on the article “Data on what Indians earn does have plenty to reveal of poverty” published in “Live mints” on 5th April 2024.

UPSC Syllabus Topic: GS Paper 1- Society-poverty

News: This article discusses how despite official reports, many Indian workers, especially casual ones, earn less than the minimum wage and poverty line, indicating that a significant number of Indians still live in poverty. It also highlights the issue of declining job quality and low wages in India.

For details information on Poverty Measurement in India read here

What does the new Consumption Expenditure Survey (CES) say?

The new Consumption Expenditure Survey (CES) has a different survey design, sparking debate on setting the right poverty line.

It’s unclear if this new CES accurately reflects poverty levels without a revised poverty line by experts.

The CES indirectly indicates poverty through wages of the poorest workers.

How can poverty levels be estimated?

Poverty levels can be estimated by looking at the wages of the poorest group of wage workers, a method used for initial poverty lines.

The minimum wage for unskilled workers, crucial for this estimation, was ₹424 per day in 2023 and ₹449 in 2024.

The Rangarajan poverty line for 2022-23 is set at ₹1,837 and ₹2,603 monthly per person for rural and urban areas, respectively.

This method considers actual working days from the Periodic Labour Force Survey, suggesting a daily earning need of ₹390/₹552 in rural/urban areas to cross the poverty line.

A family poverty line of ₹9,185 in rural and ₹13,015 in urban areas is assumed for a five-member family.

What are the issues with the minimum wage in India?

The government notified minimum wages are often lower than what is needed to meet the poverty line. For example, the 2024 minimum wage is ₹449 per day, below the ₹483 recommended by the labour ministry.

According to the India Employment Report 2024, over half of casual workers didn’t receive the minimum wages.

Specifically, 76% of agricultural workers and 70% in construction earned below minimum wages.

Additionally, 41% of regular workers earned less than the minimum wage.

This situation points to a widespread issue of wages being insufficient to lift workers above the poverty line.

What does all of this mean for poverty and unemployment in India?

The data suggests that a significant portion of Indians live in poverty, with low wages and poor job quality.

Even though poverty might have reduced since 2011-12, many workers, including those in better positions, still face meager earnings.

This challenges claims of India eliminating extreme poverty, highlighting the reality of poorly paid workers and deteriorating job quality.

Questions for practice:

Discuss the implications of the discrepancy between government-notified minimum wages and the wages needed to meet the poverty line, as outlined in the India Employment Report 2024.