Column : The MGNREGA effect on wages

RBI's data release on average daily wage rates for men in rural areas is quite an eye opener. Besides presenting various data points that show how people live across professions and states, it also sets a different perspective on other issues relating to wages that are spoken of in debates, including the impact of MGNREGA and the poverty definition.

The data provided is over eight years across different occupations and states. The occupations, agro-related and others, cover 18 distinct groups. Some of the important takeaways are the following. First, wages vary across jobs significantly depending on the level of skill that is required for the same. The non-agriculture segment provides higher wages as seen in the case of masons (R256), carpenters (R212), well diggers (R212) that contrast with weeding and picking, which paid R133 as of March 2012. The herdsman's job is the lowest with a pay of R95 as of March 2012. Second, the growth in wages over the last eight years is fairly good, at an average of between 12% to 21%, for cobblers and winnowers, respectively. This means that the increase in wages does adequately cover inflation over the period, and that there could be a higher gain considering that CPI for agricultural workers has averaged 7.5% during this period. However, as will be discussed later, a substantial part of this increase has emanated in the last 2-3 years, ostensibly on account of MGNREGA. Third, the wage profile across states presents stark variations across these professions.

Kerala has the highest wages, which can be attributed more to the higher literacy rate where there is less labour available as also the fact that farming is not a major profession in this state. Tamil Nadu, Punjab, Haryana, Himachal Pradesh and Jammu & Kashmir are the states with higher wages. Scarcity can be the factor for J&K, while the agriculture focus has pushed up wages in Haryana, Punjab and Himachal. Tamil Nadu comes as a surprise, where wages are one of the highest across professions.

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