Why in the news? 

Recently, a report by Bahutva Karnataka shows that the share of self-employed workers increased, while the share of those in formal employment remained low

What does the Report say?

• The stagnation in economic growth in India is evident in the share of households earning less than the proposed National Floor Level Minimum Wage (NFLMW) of ₹375 a day, with approximately 34% falling below this threshold.
  • Additionally, wage inequality has exacerbated the gap between the rich and the poor.
• In 2022, the top 1% and 10% of the population held 22% and 57% of the national income, respectively, while the bottom 50% held a significantly lower share at 12.7%, as per data from the World Inequality Database.

The major observation in India: Many households still earn less than the NFLMW:

• Stagnant Income Growth: There has been no significant growth in income over the past five years across different employment categories.
• Low Earnings Below NFLMW: Many households still earn less than the proposed National Floor Level Minimum Wage (NFLMW). In 2019, an expert committee recommended the NFLMW to be at least ₹375 per day and ₹3,050 per week.
• Regional Disparities: Analysis of 34 States and Union Territories (UTs) revealed that in about 19 of them, more than 20% of households earned less than ₹375 a day or ₹3,050 a week in 2022-23.
  • In states like Chhattisgarh and Uttar Pradesh, over 50% of households earned less than the recommended minimum wage.
• Large Number of Low-Income Workers: The report highlights that nearly 30 crore workers earn less than the minimum wage, indicating a significant portion of the workforce struggling with low earnings.

The year-wise wealth share of the top 10% and the bottom 50% of the population-

• Stagnant Income Growth vs. GDP Per Capita: Despite an increase in GDP per capita over the last decade, income growth among the majority of the population has remained stagnant.
• GDP Per Capita Increase: Over the past 10 years, GDP per capita in India has risen by 60%, indicating overall economic growth and prosperity.
• Low Earnings Below NFLMW: Despite GDP growth, close to 35% of total households still earn less than the proposed National Floor Level Minimum Wage (NFLMW).
• Increase in Wealth Disparity: The share of national wealth held by the wealthiest 10% of the population has increased from 63% in 2012 to 64.5% in 2022. Conversely, the share of wealth held by the poorest 50% of the population has decreased from 6.1% in 2012 to 5.6% in 2022.

What are the measures to resolve these issues?

• Promote Formal Employment: Encourage policies and initiatives to boost formal sector employment, providing stable income and social security benefits. Offer incentives to businesses to create more formal job opportunities.
  • Focus on promoting vocational training and entrepreneurship among women to enhance their participation in formal sectors.
• Ensure Equal Pay and Opportunities: Enforce laws to ensure equal pay for equal work, regardless of gender. Implement policies to eliminate gender discrimination in hiring practices and promotion opportunities.
• Improve Minimum Wage Standards: Review and revise minimum wage standards regularly to ensure they are in line with the cost of living and provide a decent standard of living.
• Invest in Rural Development: Promote rural development initiatives to create alternative sources of livelihood and reduce dependency on agriculture, especially for women engaged in unpaid labor.
• Address Regional Disparities: Implement targeted interventions to address rural-urban disparities in income and employment opportunities. Focus on infrastructure development, skill enhancement, and investment promotion in economically backward regions.
• Enhance Social Safety Nets: Strengthen social safety net programs such as Universal Basic Income (UBI), healthcare, and education to provide a buffer against income volatility and support vulnerable households.

Conclusion:

Stagnant income growth and rising self-employment underscore economic challenges, with many households earning below the proposed minimum wage. Resolving issues requires promoting formal employment, equal pay, rural development, and progressive taxation.

PYQ Mains-

Q- Can the vicious cycle of gender inequality, poverty and malnutrition be broken through microfinancing of women SHGs? Explain with examples.

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