Wage Cuts For India’s Informal Workers May Have Been Among The Sharpest: ILO Report
People wait in lines on the banks of Yamuna River to be transferred to a shelter during a lockdown imposed due to the coronavirus in New Delhi, India, on Wednesday, April 15, 2020. Photographer: Prashanth Vishwanathan/Bloomberg

Wage Cuts For India’s Informal Workers May Have Been Among The Sharpest: ILO Report

The Covid-19 pandemic has led to job losses and wage cuts across the world, reaffirmed the International Labour Organization’s Global Wage Report for 2020. While data across countries is not strictly comparable, the findings of the report suggest that the drop in wages seen by India’s informal workers in the early months of the pandemic may be among the sharpest.

“Early data from national statistical offices show that around two-thirds of countries, for which short-term statistics are available, showed decreasing wages or slower average wage growth,” the report published on Wednesday said.

Across India, informal workers experienced a sharp fall in wages of 22.6%, while formal workers’ wages were cut by 3.6% in lockdown 1.0 and lockdown 2.0 between March 24 and May 3, 2020, the report said, citing a research paper by Xavier Estupinan from the ILO and Mohit Sharma from Collaborative Research and Dissemination.

The paper had estimated that workers informally employed in the unorganised sector suffered a wage loss amounting to Rs 63,550 crore, while the total wage loss was estimated at Rs 86,448 crore over this time.

Since India does not have high frequency wage data, the ILO limits its study of India to the research cited above. No data is provided for wages since May.

The Average Wage Index

Across other countries, where official data on unemployment and wages is available, the report constructs an average wage index for the first two quarters of 2020, with the year 2019 used as the reference period.

In Vietnam, real average wages declined by 10.5%, while Malaysia saw a wage drop of 2.1% in real terms and 4.8% in nominal terms in April. In Mexico, average wages fell in April and May 2020 by about 1.5% as unemployment rates rose.

Across advanced countries, however, real average wages increased by 2.6% at the end of the second quarter of 2020, owing to unprecedented changes in the composition of employment in many countries. The rise, arising from the changes in the composition of employment due to the loss of lower-paying jobs, was led by the United States, Canada, France and Italy.

Downward pressure on wages was, however, seen in Germany, Spain and the United Kingdom.

Minimum Wages

The report further studied any changes in minimum wages.

Twelve out of the 87 countries increased their minimum wage in 2020. In India, only some Indian states such as Bihar, Chhattisgarh, Goa, Gujarat, Karnataka, Madhya Pradesh, Tamil Nadu, Uttarakhand and Uttar Pradesh, have adjusted wages since the first quarter, the report said.

Among those countries that adjust minimum wages on a regular basis, the ILO’s analysis revealed that all the adjustments regularly scheduled for the first quarter did occur in 2020. Further 67% of jurisdictions usually adjusting in the second quarter have stuck to the scheduled adjustment date.

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