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The lingering crisis of labour post-pandemic

 GS Paper 3

Syllabus: Indian Economy and issues relating to employment

 

Source: TH

 Direction: The article highlights crises in global and Indian employment scenarios, their impact and remedies.

 

Context: The International Labour Organisation (ILO) recently published two reports (The Global Wage Report 2022-2023 and Asia-Pacific Employment and Social Outlook 2022) that provided insight into the global employment scenario, including wages, following the pandemic.

What does the report say?

  •  The Global Wage Report 2022-2023: The impact of twin crises – inflation and COVID-19 created a “striking decline” in real monthly wages and economic slowdown around the globe.
    • The war in Ukraine and the global energy crisis further aggravated the situation.
  • The Asia-Pacific Employment and Social Outlook 2022: The Asia-Pacific region lost about 22 million jobs in 2022.

 

Scenario in India:

  • According to the Ministry of Statistics and Programme Implementation, the nominal wages rose to ₹17,017 per month in 2021 from ₹4,398 in 2006.
  • But when inflation is taken into account, real wage growth falls to -0.2% in 2021, down from 9.3% in 2006. (in contrast, real wage growth in China was around 2% (2019-2022).

 

Impact of job loss and decrease in wages:

  • Millions of workers will be in a dire situation: The increasing cost of living has the greatest impact on lower-income earners.
  • Income inequality will rise.
  • Poverty will rise: 75 to 95 million people were pushed into extreme poverty during COVID-19.

 

Remedies suggested by the ILO:

  • Policy responses to the cost-of-living crisis: For example, in the bargaining process for future nominal wage adjustments, prudent price estimates should be included.
  • Strengthen labour market institutions and wage policies.
  • Governments should focus on the gender pay gap.
  • There is an urgent need to address the negative effects of –
    • Climate change;
    • Increasing inequalities;
    • Poverty, discrimination, violence and exclusion;
    • The lack of vaccines, inadequate access to sanitation and essential healthcare for all;
    • Growing digital divide

Way ahead:

  • A multilateral approach is key to solving the labour crises
  • The creation of decent formal wage employment

 Conclusion: The above issues need to be addressed for a more equitable distribution of wages and income – a key contributor to equitable and sustainable wage growth.

How is the word “Wage” defined?

  • It is the total gross remuneration (including bonuses) earned by employees during a given period for time worked/not worked (such as paid leaves).
  • A nominal wage (not inflation-adjusted) is the amount paid by an employer in exchange for labour. A real wage, on the other hand, has been adjusted for inflation.
  • If the nominal wage grows at a slower rate than the rate of inflation, purchasing power will decline.

Insta Links:

India’s big problem of low-quality employment

 

Mains Links

Q. The covid-19 pandemic has adversely affected the economy leading to an increase in unemployment rates across the country. Discuss the steps that are needed to overcome this issue as the economy recovers. (250 words)

 

Prelims Links:

Identify the institution based on the information given below:

  1. Established as an agency for the League of Nations following World War I.
  2. Established by the Treaty of Versailles in 1919.
  3. It became the first specialised agency of the United Nations (UN) in the year 1946.

Choose the correct answer using the codes given below:

    1. ILO
    2. World Bank
    3. WHO
    4. IMF

 

Ans: 1)

Explanation:

About ILO:

  • Established as an agency for the League of Nations following World War I.
  • Established by the Treaty of Versailles in 1919.
  • It became the first specialised agency of the United Nations (UN) in the year 1946.
  • It got the Nobel Peace Prize in 1969.
  • It is the only tripartite U.N. agency. It brings together governments, employers and workers.
  • Headquarters: Geneva, Switzerland.