News Excerpt:

Even though the fact sheet on the Consumption Expenditure Survey (CES) has been officially released, the debate on poverty is still ongoing.

How is the poverty line estimated?

Given that the new CES is based on a completely new survey design, a new expert committee needs to decide on the appropriate poverty line to be used with these CES readings. Till then, the wages or earnings of the poorest wage workers are the best alternative way to understand poverty levels, which is not a new approach but is firmly grounded in reality.

Minimum Wage Estimation:

• According to the Government notification, the minimum wage for unskilled workers in areas with the lowest urbanization or rural areas for 2023 was ₹424 per day, 

• • For 2024, it is ₹449 per day. 
• This is lower than the price-adjusted minimum wage of ₹483 in 2022-23, as per the suggestion of the labour ministry expert committee. 
• The updated Rangarajan poverty line for 2022-23 at ₹1,837/ ₹2,603 per month per person for rural/urban areas, respectively, implies a family poverty line of ₹9,185/ ₹13,015, assuming a five-member family. 
• Based on the actual number of days worked in a month from the Periodic Labour Force Survey (PLFS), a wage worker with a family to support would need a minimum earnings of ₹390/552 per day in rural/urban areas to cross the poverty line.
• For all of India, it would imply a poverty line of ₹445 per day,  slightly higher than the government-notified minimum wages.

What is the actual level of wages received by casual wage workers?

• According to the Labour Bureau data, the average wage in agricultural occupations in January 2023 was ₹362 per day. 
• It was higher in non-farm occupations, at ₹412, still lower than minimum wages. 
• According to the PLFS readings, the average wage for casual workers in rural areas in Jan-Mar 2023 was ₹383/day, 
• Higher than the Labour Bureau's data for agricultural workers but still below minimum wage.
• On average, a casual wage worker is earning less than both the minimum wage and the Rangarajan poverty line in 2022-23. 
• We also have estimates from the India Employment Report (IER) 2024. 
• As per the report, brought out by the International Labour Organization and Institute for Human Development, 
• 52% of all casual workers did not receive the minimum wage. 
• 76% of workers in agriculture and 70% in construction got wages lower than minimum wages. 
• It is not just about the casual wage workers but even 41% of the regular workers earned less than minimum wages.
• Together, regular and casual wage workers account for almost half of all workers in 2022-23. And almost 45% of them were earning less than minimum wage. 
• The proportion of workers who earned less than the Rangarajan poverty line was one-fifth.

Decrease in Real Wages:

• The IER confirms the trend of a steady decline since 2011-12 in real wages of regular workers. 
• While casual wage worker wages based on PLFS increased between 2011-12 and 2022-23, the wage growth rate was half the pace observed between 2004-05 and 2011-12. 
• The Labour Bureau data suggests a decline in real non-farm wages for casual wage workers.
• Also, agricultural wages have increased by less than 1% per year in the last decade.

Conclusion:

• While these estimates may not be precise, comprehensive wage and earnings data indicate that a significant proportion of Indians still live in poverty. 
• Although poverty may have declined since 2011-12, the improvement appears to be only marginal. 
• The broader issue extends beyond a mere estimation of poverty, highlighting the declining employment quality in India and meagre earnings for most workers, including those in relatively better-paid regular positions.