Since 2014, the poorest communities are earning less

Source: The post is based on the article “Since 2014, the poorest communities are earning less” published in the Indian Express on 24th May 2023.

Syllabus: GS – 3: Inclusive growth and issues arising from it.

Relevance: About growth rate trends of poor communities.

News: According to Labour Bureau data, in 2022-23, the growth rate of real wages was just 0.2% for male agricultural labourers, and it is negative for non-agricultural labourers and construction workers.

What are the growth rate trends in the past decade?

The real wages of male agricultural labourers, non-agricultural labourers and construction workers grew at less — much less — than 1% per year between 2014-15 and 2021-22. It is just 0.8% per year for agricultural labour, 0.2% for non-agricultural labour and slightly negative for construction workers (men only).

How do growth rate trends change if one alters the methodology?

The “unpack-repack method”: If one calculates state-specific, month-specific year-on-year growth rates, and then aggregates them using unweighted averages over months and population-weighted averages over states, the results will change. In that case, the real wages will be rising fast between 2014-15 and 2018-19.

Calculating annual growth rates: If one calculates under this method, then the real wages are much the same today as in 2014-15.

Which method one should prefer?

-Labour Bureau data clearly point to near-stagnation of informal-sector real wages in recent years.

-The wage data collected by the Centre for Labour Research and Action reveal a steady decline in real wages of brick-kiln workers in the last 10 years.

Note: Brick-kiln work is a fallback occupation for some of India’s poorest communities.