Agricultural Labor and Wages since 1950

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AGRICULTURAL LABOR AND WAGES SINCE 1950 Agricultural labor households are among the poorest segments of rural society in India. The Population Census, conducted every ten years, and the quinquennial sample surveys of the National Sample Survey Organization (NSSO) on Employment and Unemployment are two sources of data on overall employment and unemployment in India. In the post-independence period, decennial census data are available from 1951. However, it is not possible to gather detailed information on employment-related aspects through this census. The quinquennial surveys of NSSO, on the other hand, provide reasonably detailed information, and the concepts used have remained similar in the various rounds of surveys on employment and unemployment it has conducted since 1972–1973.

Regarding wages for agricultural laborers, there are mainly four sources: Agricultural Wages in India, National Sample Surveys, Rural Labor Enquiries, and Cost of Cultivation Studies. In India, the share of agriculture in the gross domestic product (GDP) declined from nearly 60 percent in the 1950s to less than 25 percent in the 1990s. However, as shown in Table 1, the share of agriculture in employment declined slowly since the 1960s. The share of agriculture in employment for males declined from 75.9 percent in 1961 to 60 percent in 1999–2000. The decline is much slower for females. Still, 75 percent of females depended on agriculture for their livelihood in 1999–2000.

The agricultural workers in the table consisted of both cultivators and agricultural laborers. The growth of agricultural laborers over time was much faster than that of cultivators. In fact, some cultivators became agricultural laborers in the last few decades. The share of agricultural laborers among total agricultural workers was less than 25 percent in 1961, but it increased to 42 percent in 1993–1994 and to 45 percent in 1999–2000. The number of cultivators declined sharply, over 6.5 million

Agricultural and total workers (rural and urban): 1961 to 1999–2000
 Number of workers (millions)Percentage share
SOURCE: Compiled from Sundaram, K. "Employment–
Unemployment Situation in the Nineties: Some Results from NSS Fifty-fifth Round Survey." Economic and Political Weekly 36, no. 11 (2001): 931–940.
Agriculture, forestry, and fishing 143.28 237.79 75.959.9
Total workers188.68397.02100.0100.0
Agriculture, forestry, and fishing51.0293.2185.774.9
Total workers59.51121.60100.0100.0

between 1993–1994 and 1999–2000. On the other hand, the number of agricultural laborers increased by 3 million during the same period.

Agricultural households increased significantly between 1963–1964 and 1983. The number of rural households increased by 49 percent, while that of agricultural labor households increased by more than 100 percent. The percentage of agricultural labor households among all rural households increased steadily, from around 21 percent in 1963–1964 to 31 percent in 1983. In 1993–1994, the share declined to 27 percent but rose again to 31 percent in 1999–2000. Thus, the share of agricultural laborers in total rural households hovered around 30 percent over the last two and a half decades. There were about 45 million agricultural labor households in the country in 1999–2000.

There have been changes in the composition of rural workers. Attached labor has declined, while casual labor has increased. The share of agricultural self-employed among total rural workers for males declined from 51.5 percent in 1977–1978 to 42.5 percent in 1999–2000, while the corresponding share of agricultural regular workers for males declined from 4.9 percent to 1.8 percent. On the other hand, the share of casual agricultural (temporary daily) workers among total rural workers for males increased from 16 percent to 20 percent. Similarly, the share of casual agricultural workers among the total for females increased from 25 percent to 30 percent from 1977–1978 to 1999–2000.

Trends in Wages for Agricultural Laborers

The annual earnings of agricultural laborers depend on the number of days of employment and levels of wages. Increasing wages is very important for improving the standard of living of agricultural laborers. There have been a number of studies that have examined the trends in agricultural wages, showing that agricultural wages fell during the 1960s. The trends in wages in different parts of India were studied to explain the process of wage determination. Wages seems to have increased in all states since 1974–1975. However, only Andhra Pradesh and Assam displayed consistent rises in wages during the period. In all other states, there was considerable fluctuation in real wages.

Real wages increased in the 1980s and 1990s. However, the growth rates differ from period to period. All the sources showed that highest growth rate of real wages were achieved during the period from 1983 to 1987–1988. The lowest growth was achieved during the period from 1993–1994 to 1999–2000. In states like Punjab, Haryana, and Kerala, wage rates were more than 70 rupees per day, with Kerala showing 110 rupees in 1999–2000. On the other hand, states like Bihar, Madhya Pradesh, and Orissa recorded less than 45 rupees in 1999–2000. Many states recorded high growth rates during the period from 1983 to 1987–1988, while the period from 1993–1994 to 1999–2000 witnessed low growth rates.

Minimum wages

The major legislative instrument for fixing and enforcing minimum wages for the unorganized sectors, including agriculture, is India's Minimum Wages Act of 1948. Under this act, minimum wages for an eight-hour workday are fixed for certain types of jobs where, in the judgment of the government, market conditions leave the workers particularly vulnerability to exploitation. Many studies have shown, however, that actual wages were generally lower than statutory minimum wages, and that the minimum wage laws are generally ineffective. Only in the case of Kerala were wages high, thanks to state-guided statutory minimum wage controls. However, the implementation of minimum wages can prove counterproductive for the generation of employment, as Kerala's experience also has demonstrated.

Poverty of Agricultural Laborers

Estimates of the incidence of poverty among agricultural labor households during the period from 1963–1964 to 1983 place it around 52 percent in 1963–1964, with an increase to 56 percent in 1977–1978, then a decline to around 46 percent in 1983, a good year for agriculture.

Poverty ratios in different sectors provide a less direct but equally valuable indicator of the relative productivity of work in different sectors of the economy. Head count poverty ratios by sectors, available for rural areas, show that the three poorest segments are: agricultural laborers, construction workers, and persons in households mainly engaged in manufacturing, in that order; followed by cultivators, then households mainly engaged in transport, trade, and services other than health and education; and finally, far below all others, households engaged in rural health and education services. The numbers show that agricultural laborers who shift to any other sector seem to be better off. The poverty ratio among agricultural laborers in 1987–1988 and 1993–1994 was the highest among all the sectors. Around 55 percent of agricultural laborers were below the poverty line in 1993–1994.

Recent estimates by K. Sundaram and S. D. Tendulkar (2003) also show that agricultural labor households reported the highest incidence of poverty in 1993–1994 and 1999–2000. According to their estimates, poverty among agricultural laborers declined from about 58 percent in 1993–1994 to 45 percent in 1999–2000. However, the share of agricultural laborers in total rural poor population increased from 43 percent to 48 percent during the same period. In other words, nearly 50 percent of the rural poor belong to agricultural labor households.

Policies for reduction in poverty of agricultural laborers

Around 45 percent of agricultural laborers were still below the poverty line in 1999–2000. There is thus a need for a multipronged strategy to raise rural employment and real wages. Agricultural growth will in itself generate more employment and higher wages, particularly in high poverty regions, but raising real wages through increase in agricultural labor productivity is an essential condition for poverty reduction. There are mainly two approaches for raising employment. One is through sectoral programs, and the other is through direct employment programs. Development of agriculture and rural nonfarm sectors will improve employment and wages. Labor-intensive public works programs, if properly designed and implemented, hold high promise as instruments for addressing both short-term relief and long-term asset creation. Agricultural labor households generally do not have assets. Provision of assets through self-employment can also reduce poverty. Priority must be given to increasing public investment in rural infrastructure and to creating environments for private investment. The infrastructure includes irrigation, electricity, agricultural research, roads, communications, and new technology. This initiative will provide incentives for the growth of the private sector. Investment in education and skill improvements is also crucial to producing rural diversification and reducing poverty among India's agricultural laborers.

S. Mahendra Dev

See alsoAgricultural Growth and Diversification since 1991 ; Economic Development, Importance of Institutions in and Social Aspects of


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Agricultural Labor and Wages since 1950