2021 in numbers: Rural wages
Wages can decline if the number of jobs of a particular kind decrease and job-seekers remain the same. Here’s what happened to wages in 2021
Official employment statistics, available for both rural and urban areas until June 2020 and for urban areas up to March 2021, suggest that a big impact of the Covid-19 pandemic on the labour market is qualitative. This means that if people did not become unemployed, they had to shift to low paying casual or agricultural jobs. Another way of tracking the quality of jobs is to look at the trends in wages. This is because wages can decline if the number of jobs of a particular kind decrease and job-seekers remain the same. Here’s what happened to wages in 2021.
Wage data for all kinds of workers – which is published with the annual PLFS statistics – is available only up to June 2020. However, the Labour Bureau publishes data on wages for rural labourers, which is available up to October 2021. This shows that nominal or current price wages for such workers increased by a lesser degree in 2021 compared to the growth between 2019 and 2020. The simple average of January-October rural wages in 2019 was ₹328, which increased 5.7% to ₹347 in 2020, but only 4.3% in 2021 to ₹361. While the 2020 average is excluding the month of April, during which data could not be collected due to lockdown, year-on-year growth in May-August of 2021 was also less than in 2020.
Nominal wages, however, do not show what earning a particular income meant for the worker. If prices of goods and services increase faster than wages, they can reduce the value of the wages. Adjusting the wages by Consumer Price Index (CPI) for rural areas shows that real rural wages in 2021 were lower than in 2019. Even compared to 2020, wages in 2021 were lower in the May-August period. Wages for non-agricultural labourers, more affected by lockdowns, lag behind pre-pandemic levels more than the wages for agricultural labourers.
The above statistics show that the rural labourer suffered from low income in 2021. How will this have hurt their consumption in 2021? Casual labour – though not strictly the classification used for wages of rural labourers – is a bigger contributor of work in poorer rural households than richer. Casual workers are 39% of all workers in the bottom 10% of the population by monthly per capita expenditure (MPCE) and only 17% for workers in the top 10%, according to the 2018-19 Periodic Labour Force Survey. The poorer rural households also spend a higher proportion of their monthly expenditure on food than the richer ones: around 60% among the bottom deciles compared to 40%-50% in the top deciles, according to the last consumption expenditure survey conducted in 2011-12. This means that rural labourers are likely to find their pockets strained more from food inflation than other kinds of inflation. Adjusting their wages by food group’s CPI and overall CPI shows that the food inflation did indeed put a higher strain on their income than overall inflation. Such workers are then likely to have either cut down on their food intake or reduced consumption of other goods and services.