World of Work Report 2013: Repairing the economic a nd social fabric 1 World of Work Report 2013 Snapshot of India Economic growth is decelerating... • The economic recovery that commenced in 2010 has no t been sustained. GDP growth declined to 4% in 2012 from 11% in 2010 largely due to declines in corporate sector investment, foreign direct investment and exports. • The unemployment rate, which was stagnant at 4% sin ce the early 2000s, declined to 3.6% in 2009-10. • The female labour force participation declined by 8 percentage points between 2004 and 2005 (37%) and between 2009 and 10 (29%). Figure 1. Growth in GDP and the unemployment rate Source: IMF, Central Statistical Office, India ...quality of employment and poverty levels remain a concern... • The quality of employment remains a major concern i n India with 84% of the work force in informal employment. The high growth rates experien ced before the crisis did help in reducing poverty from 37.2% in 2004-5 to 29.8% in 2 009-10 and has lifted millions out of poverty. Though both these issues remain a major co ncern for the Indian economy. • Furthermore, there is a rise in the middle class by almost 6% between 1999 and 2008, accounting for more than 25% of the total populatio n, which would lead to an increased demand for consumer goods. Efforts should be made t o tap this growing market to boost economic growth. International Institute for Labour Studies Under Embargo until 10h00 GMT 3 June 2013 World of Work Report 2013: Repairing the economic a nd social fabric 2 ...minimum wages and social protection could help in improving the quality of employment. • The Report shows that the proportion of workers rec eiving minimum wages have increased by more than 20 percentage points (more than the do uble for women) in the period between 2004-5 and 2009-10, reaching a level of 65%. • The improvement in compliance could partly be attri buted to the MGNREGA which provided (until most recently) minimum wages for un dertaking unskilled work in most of the rural areas. The scheme also placed upward pres sure on market wages in both rural and urban areas, and provided an opportunity for worker s to bargain for better wages. • The Report shows that minimum wages in India have a lso helped in reducing wage inequality (-0.01) especially at the bottom part of the wage d istribution (-0.13). Figure 2. Minimum wage compliance in developing cou ntries Source: IILS calculations Stimulating domestic demand could help in rebalanci ng the economy. • Rebalancing demand through minimum wage increase : India, as most of the developing countries, needs to boost domestic sources of growt h in order to counteract the weakening export prospects to crisis-hit advanced economies. A way to trigger domestic demand is to increase the purchasing power of the domestic econo my by ensuring that minimum wages are revised regularly. • Improving compliance: The challenge for India is to improve and achieve full compliance with regard to enforcing of minimum wages. This req uires political will. However, the recent experience with the MGNREGA shows that political wi ll along with the active role of civil society could help in improving compliance. • Addressing under-employment: The previous efforts put forward under the MGNREGA helped in reducing under-employment and increased t he purchasing power of the low-income households. Such efforts could be strengthened to e nsure that there is sufficient domestic demand. World of Work Report 2013: Repairing the economic a nd social fabric is available at (ilo.org/INST). For further comment, journalist s are invited to contact Uma Rani (tel: +41 22 799 7521; email: [email protected] ) or Raymond Torres (tel: +41 22 799 7908; email: [email protected] ), Director, of the ILO’s International Institute f or Labour Studies.
Posted on: Thu, 13 Jun 2013 14:58:21 +0000
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