Context : Findings from PLFS Data
- Salaried Class Stagnation: Real wages for salaried workers have stagnated since 2019. In June 2024, they were 1.7% lower than in June 2019.
- Casual Labour Wages Rise: Wages for casual labour increased by 12.3% in real terms since 2019, despite a dip during the pandemic.
- Self-Employment Struggles: Wages for self-employed workers declined by 1.5% in real terms compared to 2019. The share of self-employed workers has increased.
Relevance : GS 3(Income , Economy)
Expert Opinions on Stagnation
- Labour Market Mismatch: Overqualified workforce and lack of well-paying jobs (Anamitra Roychowdhury).
- Skill Deficit: Need for skill development at all levels (Arvind Virmani).
- Low Private Investment: Depressed demand leads to fewer jobs and wage stagnation (Rahul Menon).
Sector-wise Wage Trends
- Salaried Workers
- Wages increased by 2% in June 2020 but dipped by 6% in 2021 and 1% in 2022.
- Declining returns to higher education; employment growth lacks quality.
- Casual Labour
- Real wages rose by over 12% in rural areas and 11.4% in urban areas.
- Growth in casual labour not a net positive due to irregularity and job insecurity.
- Self-Employed Workers
- Rural self-employed wages increased by 3.02%, but urban wages fell by 5.2%.
- Increase in unpaid helpers in household enterprises (from 15.9% in 2019-20 to 19.4% in 2023-24).
- Higher self-employment share is a sign of distress rather than growth.
Macroeconomic Implications
- Weak Consumption Demand: Wage stagnation affects demand, slowing economic growth.
- Policy Impact: Demonetisation and GST led to economic shocks affecting wages.
- Government Response: Budget changes in tax slabs suggest an attempt to address low domestic demand.
Future Outlook
- Private investment remains weak, making wage recovery uncertain.
- Without wage growth, consumption-driven economic growth may remain sluggish.
