Increase in minimum wage – A case of deceptive numbers

By Harshmeet Singh

Last week saw a significant announcement by the Delhi Government that went unnoticed; probably because it was significant only for the most neglected section of the society. The government raised the minimum monthly wage for unskilled workers like peons in the national capital from Rs 9,048 to Rs 9,174, which comes down to a daily wage of Rs. 390 per day. Similarly, the minimum monthly wage for semi skilled workers saw an increment from Rs 10,010 to Rs 10,136 (Rs 429 daily) while the minimum monthly wage for skilled workers will now be Rs 11,154 (Rs 467 daily) as compared to Rs 10,998 earlier. The wages for graduate workers were also revised marginally.

Comparatively, under MGNREGS, the highest ‘minimum daily wage’ for unskilled manual workers is Rs 251 which is offered by Haryana. The disparity between the minimum pay slabs in the national capital and that in the other states explains the heavy influx of unskilled workers in Delhi from all parts of the country.

Over populated slums, a fractured social infrastructure, dismal living conditions and absence of any social security are few of the outcomes arising from such migration. Though comparisons such as these paint Delhi in great light, they fail to acknowledge the high cost of living in the capital which forces these outstation workers to live in despicable conditions if they intend to save any amount to send it back home.

In most cases, the migrant workers choose to bring their families with them and find a place to live in a slum. Extremely high population density and ever deteriorating living conditions make these slums an ideal breeding ground for deadly diseases such as Dengue and swine flu.

While rise in minimum wage surely increases the purchasing power of these workers, it is hard to conclude if such revisions or programs like MGNREGS have had any commendable impact on the standard of living of the people belonging to the lowest rung of the society.

There can be 2 major reasons for such failure. First, the increase in purchasing power would only translate into growth if the overall production also grows in the same ratio. High demand and low supply would rather create a situation of inflation, resulting in rising prices, thus neutralizing the impact of higher purchasing power.

Secondly, higher wage is often deceptive. A person’s worth must be measured by his savings and not his earnings. This means that even if the unskilled workers in Delhi earn more than double the minimum wage when compared to Maharashtra’s MGNREGS numbers, it doesn’t mean that they would be living a much better life.

Numbers have a habit of presenting an incomplete and in most cases, incorrect picture. It is only once we look beyond the numbers and make an endeavor to understand the ground situation that things can change for the better.