A recent working paper by the International Labour Organisation (ILO) has found that the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) has played an important role in reducing the gender wage gap and increasing compliance with minimum wage norms in rural areas of India.
MGNREGA and rural employment
The paper, titled “Employment and wage disparities between rural and urban areas”, analysed household survey data from 58 countries and compared the labour market outcomes of rural and urban workers. It found that rural workers are more likely to be employed than urban ones, but they tend to have jobs that are low-paid, informal and unprotected.
The paper also looked at the case of India, where rural employment accounts for about two-thirds of total employment. It noted that the introduction and expansion of MGNREGA, which guarantees 100 days of unskilled work per year for every rural household that demands it, has had positive effects on rural wages.
MGNREGA and gender wage gap
The paper cited data from the Indian Labour Bureau and the Ministry of Finance to show that MGNREGA has helped to narrow the gender wage gap in rural areas from 34% in 2009-10 to 25% in 2017-18. It also said that MGNREGA has increased the bargaining power of rural workers and improved their working conditions.
According to the paper, the average daily wage rate for men under MGNREGA was Rs 201.5 in 2019-20, while for women it was Rs 196.8, resulting in a gender wage gap of 2.3%. In comparison, the average daily wage rate for casual workers in rural areas was Rs 281.7 for men and Rs 207.6 for women, resulting in a gender wage gap of 26.3%.
MGNREGA and minimum wage norms
The paper also said that MGNREGA has increased compliance with minimum wage regulations in rural areas. It said that the share of casual workers earning less than the minimum wage declined from 48% in 2009-10 to 31% in 2017-18. It also said that MGNREGA has contributed to reducing the gap in rural wages between formal salaried workers and casual workers.
However, the paper also pointed out some challenges and limitations of MGNREGA, such as inadequate funding, delays in wage payments, corruption, lack of awareness and social barriers. It also noted that there have been negative trends in the purchasing power of rural Indian wages in recent years due to elevated inflation.
Policy recommendations
The paper suggested some policy recommendations to improve MGNREGA and address the rural-urban disparities in employment and wages. These include increasing the budget allocation for MGNREGA, ensuring timely payment of wages, enhancing transparency and accountability, providing skill development and social protection for rural workers, and promoting decent work in rural areas.
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