LESSON 15

Compensation Structure and Differentials

Chapter 6: Introduction to the Importance of Wage differentials and Wage

Differentials in India

Learning Objective

• To know the importance of Wage Differential

• To understand the reasons for Wage Differential

• Prevalence of Wage Differential in India and the reasons for it

Introduction:

Wage differentials have a great economic and social significance, for they are directly
related to the allocation of the economic resources of a country, including manpower,
growth of the national income, and the pace of economic development.

Social welfare activity depends, in a large measure, on such wage differentials as will:

(a) Cause labour to be allocated among different occupations, industries and,

geographical areas in the economy in such a manner as to maximise the national product

(b) Enable full employment of the resources of the economy to be attained; and

(c) Facilitate the most desirable rate of economic progress.

Wage differentials reflect difference in the physical and mental abilities of workers,
differences in productivity, in the efficiency of management and in consumer
preferences, and act as sign posts for labour mobility. By providing an. important
incentive for labour mobility, they bring about a re-allocation of the labour force under
changing circumstances.

Under competitive conditions, wages are determined by conditions of demand (which

reflect the productivity of workers) and conditions of supply (which reflect the
attractiveness of jobs).

The level of wages would depend upon the relative scarcity of supply in relation to
demand. Scarcity differentials (which may be due to specific skills and mental abilities)
produce wage differentials; and as long as the former as inevitable, the latter, too, would
be so.
In other words, wage differentials reflect the different degrees of scarcity of the different
categories of labour; and since different categories cannot be reduced to the same degree
of scarcity in the market, wage differentials are inevitable.

Reasons for Wage Differential:

Wage differentials arise because of the following factors:

(a) Differences in the efficiency of the labour, which may be due to inborn quality,
education, and conditions under which work may be done.

(b) The existence of non-competing groups due to difficulties in the way of the mobility
of labour from low paid to high paid employments.

(e) Differences in the agreeableness or social esteem of employment.

(d) Differences in the nature of employment and occupations.

The nature and the extent of wage differentials are conditioned by a set of factors such as
the conditions prevailing in the market, the extent of unionization and the relative
bargaining power of the employers and workers.

The rate of growth in productivity, the extent of authoritarian regulations and the
centralization of decision-making, customs and traditions, the general economic,
industrial and social conditions in a country, and a host of other subjective and objective
factors operating at various levels.

The prevailing rates of wages, the capacity of an industry to pay, the needs of an industry
in a developing economy, and the requirements of social justice also directly or indirectly
affect wage differentials.

Wage differentials in India

Due to the paucity of relevant data on wage differentials, it is not possible to analyze
them in India; yet the main features of the Indian wage structure may be stated thus:

As a characteristic of the unorganized labor market, personal differentials because of job

selling, individual bargaining and wage discrimination have tended to persist in India,
especially in the unorganized sector of the economy, and even in the organized and
unorganized sections in industry.

The tendency appears to be towards the elimination of wage differentials because of

government interference through the fixation of the minimum wages and, of late, through
the appointment of Wage Boards and pressures from trade unions.
Wage differentials by, sex are quite common despite the fact the Constitution of India
enjoins upon the State to direct its policy towards securing "equal pay for equal work" for
men and women, awards of some industrial Tribunals provide for "different wages for
men and women workers, not on the ground that the work done is unequal but on the
ground that the wages of women workers support a smaller family, that the cost of
employing women workers is higher."

As regards inter-firm and inter-industry differentials in India, the former were quite
important and frequent in the past, particularly in the jute mill industry.

Of late, however, there has been a tendency towards the elimination of inter-firm
differentials. The forces, which tend to eliminate inter-personal differentials in the
country operate in this case as well.

Tutorial Activity 1.1

Questions:

1. Discuss the reasons and importance of wage differential.

2. Recent trends in wage differential in India.

Latest Updates on Rural Labor Conditions

Rural Labour Enquiry

Report on Wages & Earnings of Rural Labour Households
(55th round of N.S.S.) 1999-2000

Scope and Method of Enquiry

Introduction :

1.1 About two-third of the total labour force in the country lives in rural areas.Wage
paid employment is the main source of their livelihood. It has been the endeavour of the
Government of India to alleviate the poverty, particularly in the rural areas, by
formulating and implementing various target oriented anti-poverty rural development
programmes. Sound data base is of utmost importance for formulating such action
programmes.

With this end in view, the first Agricultural Labour Enquiry (ALE) was conducted in
1950-51, followed by the second in 1956-57. The scope of the subsequent enquiries was
enlarged to cover all rural labour households instead of agricultural labour households
alone covered in the first two enquiries. Hence, the third enquiry in the series known as
the first Rural Labour Enquiry (RLE) was conducted in 1963-65 followed by the second
in 1974-75, the third in 1977-78, the fourth in 1983, the fifth in 1987-88, the sixth in
1993-94 and the seventh in 1999-2000.

With a view to narrowing down the gap between the successive rounds of the Enquiry,
the RLE was integrated with the General Employment & Unemployment Survey of the
NSSO in 1977-78 and all subsequent enquiries are now being conducted quinquennially
to provide continuous data in the form of time series.

1.2 During the course of the Rural Labour Enquiries (RLE) data on various
socio-economic aspects viz, Employment & Unemployment, Consumption Expenditure,
Wages & Earnings and Indebtedness of rural and agricultural labourers are collected.

The RLE is also aimed at throwing up data on household consumption expenditure of the
rural/agricultural labourers for drawing weighting diagrams for updating the series of the
Consumer Price Index Numbers for Agricultural/Rural Labourers. Under these enquiries,
the data are collected and analysed for rural labour as a whole.

However, in order to enable comparison with the previous enquiries as also to understand
problems of this segment which constitutes bulk of the rural labour, the analysis is
presented for agricultural labour separately.

1.3 The usefulness of the data thrown up by the Rural Labour Enquiries has been
acknowledged by various Committees and Commissions from time to time. The National
Commission on Labour (1969) and the National Commission on Rural Labour (1991)
have recommended that the periodic surveys undertaken by the Government to
understand the rural situation should be continued and intensified.

The second National Commission on Labour (1999) has recommended that the Rural
Labour Enquiries should be conducted more frequently. The results of the latest Rural
Labour Enquiry, the seventh in the series, for which the field work was undertaken by the
NSSO during its 55th Round Survey (July, 1999 to June, 2000), are being published in the
following five reports;

i) General Characteristics of Rural Labour Households;

ii) Indebtedness among Rural Labour Households;

iii)Wages and Earnings of Rural Labour Households;

iv) Employment and Unemployment of Rural Labour Households; and

v) Consumption Expenditure of Rural Labour Households.

Objectives :

1.4 The main objectives of the enquiry are:-

i) To provide upto date serial data on demographic structure, extent of employment &
unemployment, wages and earnings, household consumption expenditure, indebtedness,
etc. for building up of reliable estimates of important socio-economic characteristics of
rural labour in general and agricultural labour in particular.

ii) To provide data relating to consumption expenditure for derivation of weighting

diagram for updating the series of CPI numbers for agricultural and rural labourers.

Scope :

1.5 The Enquiry relates to all rural labour households. However, provision has been
made in the tabulation plan to get separate estimates for agricultural labour households.

GEOGRAPHICAL COVERAGE

1.6 The survey covered the whole of the Indian Union, excepting (i) Ladakh and
Kargil districts of Jammu & Kashmir, (ii) 768 interior villages of Nagaland situated
beyond 5 Kms. of the bus route, and (iii) 172 villages in Andaman & Nicobar Islands
which are inaccessible throughout the year. A few other areas of Jammu & Kashmir were
also excluded from the survey coverage due to unfavourable field conditions.

SAMPLE DESIGN

1.7 A stratified multistage sampling design was adopted for selection of the
sample units for the survey. The first stage units (FSU) were the census villages
(panchayat wards for Kerala). The ultimate statge units (USU) were the households.
1.8 Sampling frame for first stage units : The list of census villages as per 1991
population census (list of Census villages as per 1981 Census for the State of Jammu &
Kashmir) constituted the sampling frame for selelction of sample FSUs for most of the
states. For the rural areas of Kerala, however, the list of panchayat wards was used as the
sampling frame for selection of panchayat wards. For Nagaland, the list of villages
located within 5 Kms. of a bus route constituted the sampling frame, whereas, the list of
accessible villages constituted the sampling frame for Andaman & Nicobar Islands. All
the uninhabited villages of the country, as per 1991 Census, were left out of the purview
of the survey.
1.9 Stratification of the first stage units : From the list of villages of each
State/Union Territory (U.T.), initially, two special strata were formed by considering
villages (a) with very small population and (b) with very high population as stated
below:-
Stratum 1: all FSU’s with population between 1 to 100.
Stratum 2: FSU’s with population more than 15,000
The above two strata were spread across a given State and were not confined to any
particular administrative division within the State. Each of the above two strata was
formed if at least 50 such FSU’s were there in the respective frames. Otherwise, these
villages were included in the general strata. While forming general strata, efforts were
made to treat each district with population less than 2 millions as a separate stratum. If
limitation of sample size did not allow forming so many strata, smaller districts within a
particular NSS region were merged to form a stratum. Each district with rural population
of 2 million or more as per 1991 Census (1.8 million or more as per 1981 Census in case
of Jammu & Kashmir) was as usual split into a number of strata.
1.10 Allocation of first stage units : At the all-India level, a total number of 10,384
FSU’s (6208 villages and 4176 urban blocks) was selected for survey in the central
sample in the 55th round. The actual State/UT level allocation of FSUs in the rural sector
is given in Statement- I. State/UT level rural sample size was allocated among the rural
strata in proportion of population. Sample size for the whole round for each State/UT was
allocated equally among the 4 sub-rounds. Stratum level allocation for both rural and
urban areas of a sub-round were made in even numbers in order to facilitate selection of
FSU’s in the form of 2 independent sub-samples. Sub-sample numbers were 1 and 2 for
sub-round 1; 3 & 4 for sub-round 2; 5 & 6 for sub-round 3; and 7 & 8 for sub-round 4.
One salient feature of the 55th round was the “rotation sampling scheme” which was
adopted for the first time in the NSS for the purpose of collection of employment-
unemployment data from central sample only. Under this scheme, 1 sub-sample of the
sampled first stage units (FSU’s) of each sub-round was revisited in the subsequent sub-
round. From each such FSU, sample households visited in the previous sub-round for
collecting data on employment-unemployment were revisited in the subsequent sub-
round for collecting employment-unemployment details.
1.11 Selection of FSU’s : For each sub-round, sample first stage units from each
stratum were selected in the form of 2 independent sub-samples by following circular
systematic sampling with (a) probability proportional to population for all rural strata
other than stratum 1, and (b) equal probability for rural stratum 1.
1.12 Selection of hamlet-groups (hg’s) : Depending upon the values of approximate
present population (P) and approximate total number of non-agricultural enterprises (E)
of the villages, the FSU’s were further divided into a fixed number of hamlet-groups
(hg’s) as stated below:-
Value of P No. of hg’s formed in Value of E No. of hg’s formed
the FSU as per in the FSU as per
population criterion enterprise
criterion
1 2 3 4
Less than 1200 1 Less than 100 1
1200-1999 5 100-249 5
2000-2399 6 250-299 6
2400-2799 7 300-349 7
2800-3199 8 350-399 8
and so on and so on
However, for rural areas of Himachal Pradesh; Sikkim, and Poonch, Rajouri, Udhampur
and Doda districts of Jammu & Kashmir, the number of hamlet-groups formed in the
village as per population criterion was: 1 for P<600; 5 for P=600 to 999; 6 for P=1000 to
1199; 7 for P=1200 to 1399; 8 for P=1400 to 1599, and so on (procedure remaining
unchanged as per enterprise criterion). Further, the higher of the two values obtained, as
per population and enterprise criteria was taken as the number (D) of hamlet-groups to be
formed in the FSU. In cases where hg’s were formed in the sample FSU, the same was
done by more or less equalising the population of the different hg’s of the FSU.
1.13 Formation of segments within FSU : The hamlet group having maximum
concentration of non-agricultural enterprises was selected with certainty for listing of
households. This hamlet-group was referred to as segment 1. From the remaining (D-1)
hg’s of the FSU, 2 more hg’s were selected circular systematically and these 2 selected
hg’s together were referred to as segment 2 for doing a combined listing of households.
The listing of households was done only in segments 1 and 2 of the FSU. The FSU’s not
requiring hg formation were treated as segment 1 for the purpose of data collection and
estimation.
1.14 Sampling frame of households : All households of segments 1 and 2 of the FSU
were listed independently and this list of households of the segments 1 and 2 constituted
the sampling frame for the purpose of selection of sample households from the
corresponding segments.
1.15 Stratification of households : All the households listed in a segment were
stratified into two second stage strata, viz., ‘affluent households’ which formed second
stage stratum 1, and the rest which formed second stage stratum 2. A household was
classified as ‘affluent’ if the household owned certain items like motor car/jeep, colour
TV, telephone, etc. or owned land/livestock in excess of certain limits.
1.16 Selection of households : Sample households were selected from the respective
frames by circular systematic sampling with equal probability. For the purpose of
systematic sampling, households in the frame of second stage stratum 2 were arranged by
means of livelihood by land possessed classes for rural samples. Two households from
second stage stratum 1 and ten households from second stage stratum 2 were selected
from FSUs with no hg formation. In the case of FSUs with hg formation, one household
from second stage stratum 1 and three households from second stage stratum 2 were
selected from segment 1 and one household from second stage stratum 1 and seven
households from second stage stratum 2 were selected from segment 2.
SAMPLE SIZE
1.17 A total of 3,74,856 persons spread over 71,385 rural households in 6046
villages were surveyed. The number of sample villages and sample rural households and
persons surveyed in different States/Union-territories and all-India for rural sector are set
out in the following statement:
STATEMENT - I
NUMBER OF VILLAGES, RURAL HOUSEHOLDS AND PERSONS SURVEYED
UNDER CENTRAL SAMPLE
Sl.No. State/U.T. No. of villages No. of households No.of persons
1 2. 3. 4. 5.
1 Andhra Pradesh 432 5181 22600
2 Arunachal 74 827 4314
Pradesh
3 Assam 291 3462 19272
4 Bihar 611 7311 40109
5 Goa 16 192 944
6 Gujarat 208 2479 12807
7 Haryana 96 1132 6502
 8 Himachal 140 1634 7793
Pradesh
9 Jammu & 131 1472 8322
Kashmir
10 Karnataka 232 2763 14154
11 Kerala 240 2604 12324
12 Madhya Pradesh 432 5144 28816
13 Maharashtra 352 4121 20399
14 Manipur 64 738 3997
15 Meghalaya 80 933 4901
16 Mizoram 39 428 2276
17 Nagaland 40 480 2441
18 Orissa 293 3477 17059
19 Punjab 184 2152 12067
20 Rajasthan 272 3229 19021
21 Sikkim 88 1056 5173
22 Tamil Nadu 352 4173 17338
23 Tripura 86 1031 4853
24 Uttar Pradesh 791 9432 57397
25 West Bengal 384 4550 23508
26 A & N Islands 24 273 1514
27 Chandigarh 16 180 654
28 D & N Haveli 16 192 914
29 Daman & Diu 15 180 821
30 Delhi 16 187 982
31 Lakshadweep 7 84 363
32 Pondicherry 24 288 1222
All-India 6,046 71,385 3,74,856
PERIOD OF SURVEY :
1.18 The enquiry was integrated with the 55th round of the N.S.S. during the
period July, 1999 to June, 2000 which was divided into 4 sub-rounds of three
months duration each.

CONCEPTS AND DEFINITIONS :

1.20 The important concepts and definitions adopted for the survey are as follows :-
(i) HOUSEHOLD :
A household is a group of persons normally living together and taking food from a
common kitchen. A boarding and lodging house, a hotel or a hostel is treated as a cluster
of households where each individual boarder(with his dependants or guests) forms a
separate household. Households maintained and fed directly by institutional bodies such
as those in prisons, police quarters, cantonments, hospitals, asylums, relief camps are,
however, excluded from the scope of the survey.
(ii) HOUSEHOLD MEMBERS :
Any person who is a normal resident of the sample household is considered to be a
member of the household. The members of a household may or may not be related by
blood to one another. Accordingly, any person who usually lives and takes the principal
meals with the household is also considered a member of the household.
(iii) HOUSEHOLD SIZE:
The number of normally resident members of a household formed the size of the
household. It included temporary stay-aways but excluded temporary visitors and guests.
(iv) RURAL LABOUR HOUSEHOLD
A household was classified as rural labour household if its major source of income during
the last 365 days preceding the survey was more from wage paid manual labour
(agricultural and/or non-agricultural) than either from paid non-manual employment or
from self-employment. Rural labour households include agricultural labour households
also.
(v) AGRICULTURAL LABOUR HOUSEHOLD
Of the households which are initially classified as `Rural Labour Households’, those
deriving 50 percent or more of their total income from wage paid manual labour in
agricultural activities are treated as agricultural labour households.
(vi) RURAL LABOUR HOUSEHOLDS WITH CULTIVATED LAND :
A household with cultivated land, either owned or taken on lease, was treated as
household with land. Cultivated land was taken to mean the net area sown during the last
calendar year (i.e. January to December, 1998) preceding the year of enquiry and
included orchards and current fallows.
(vii) LAND POSSESSED :
Land possessed means land owned (including land under ‘owned-like possession’) (+)
land leased in (-) land leased out (+) any land held by the household which is neither
owned nor leased in (e.g. encroached land etc.).
(viii) MANUAL WORK :
A job essentially involving physical labour is considered as manual work. However, jobs
essentially involving physical labour but also requiring a certain level of general,
professional, scientific or technical education are not to be termed as manual work. On
the other hand, jobs not involving much of physical labour and at the same time not
requiring much educational background, are to be treated as manual work. Thus,
engineers, doctors, dentists, midwives, etc. are not considered as manual workers even
though their jobs involve some amount of physical labour. But, peons, chowkidars,
watchmen, etc., are considered as manual workers even though their work may not
involve much physical labour.

(ix) WAGE PAID MANUAL LABOUR :

A person who does manual work in return for wages in cash or kind or partly in cash and
partly in kind (excluding exchange labour) is a wage paid manual labour. Salaries are
also to be counted as wages. A person who is self-employed in manual work is not
treated as a wage paid manual labour.
(x) RURAL LABOUR :
Rural labourer is defined as ‘one who does manual work in rural areas in agricultural
and/or non-agricultural occupation in return for wages in cash or kind, or partly in cash
and partly in kind.’ The term ‘wages’ included salary also. Any person who was self
employed, though in manual work, was not treated as a wage paid manual rural labourer.
Exchange labour was also excluded.
(xi) AGRICULTURAL LABOUR :
A person was treated as an agricultural labourer if he/she followed one or more of the
following agricultural occupations in the capacity of a labourer on hire, whether paid
wholly in cash or kind or partly in cash and partly in kind;
(a) farming including cultivation, tillage, etc.
(b) dairy farming;
(c) production, cultivation, growing and harvesting of any horticultural commodity;
(d) raising of livestock, bee-keeping or poultry farming;
(e) any practice performed on a farm as incidental to or in conjunction with farm
operations (including any forestry or timbering and the preparation for market and
delivery to storage or to market or to carriage for transportation to market of farm
products).
It might be noted that manual work in fisheries was excluded from the purview of the
category of agricultural labour. Further, carriage for transportation coming under the
category (e) above referred only to the first stage of transportation from farm to the first
stage of disposal.
(xii) ACTIVITY STATUS :
It is the activity situation in which a person was found during a reference period with
regard to the person’s participation in economic and non-economic activities. According
to this, a person could be in one or a combination of the following three broad activity
statuses during a reference period:
(i) working or being engaged in economic activity (work),
(ii) being not engaged in economic activity ( work) but either making tangible
efforts to seek ’work’ or being available for ‘work’ if the ‘work’ is available, and
(iii) being not engaged in any economic activity (work) and also not available
for ‘work’.
Broad activity statuses mentioned in (I) and (ii) above are associated with ‘being in
labour force’ and the last with ’not being in the labour force’. Within the labour force,
broad activity status (I) is associated with ‘employment‘ and that of (ii) with
‘unemployment’.
Identification of each individual into a unique situation could pose a problem when more
than one of the three broad activity statuses listed above were concurrently obtained for a
person. In such an eventuality, the identification uniquely under any one of the three
broad activity statuses was done by adopting either the major time or priority criterion.
The former was used for classification of persons according to the ‘usual activity status’
approach and the latter for classification of persons according to the ‘current activity
status’ approach. Each of the three broad activity statuses was further sub-divided into
several detailed activity categories. If a person categorised as engaged in economic
activity by adopting one of the two criteria mentioned above was found to be pursuing
more than one economic activity during the reference period, the appropriate detailed
activity status code related to that activity in which relatively more time had been spent.
A similar procedure was adopted for assigning detailed activity code for persons
categorised as engaged in non-economic activity and pursuing more than one non-
economic activity. The detailed activity categories under each of the three broad activity
statuses used in the survey are stated below:
WORKING (OR EMPLOYED):
worked in a household enterprise (self-employed) as an own-account worker;
worked in a household enterprise (self-employed) as an employer;
3. worked in a household enterprise (self-employed) as ‘helper’;
4. worked as a regular salaried/wage employee;
5. worked as a casual wage labour in public of works;
6. worked as a casual wage labour in other types of works;
7. did not work due to sickness though there was work in household enterprise;
8. did not work due to other reasons though there was work in household enterprise;
9. did not work due to sickness but had regular salaried/wage employment;
10. did not work due to other reasons but had regular salaried/wage employment,
NOT WORKING BUT AVAILABLE FOR WORK (OR UNEMPLOYED):
11. sought work,
12. did not seek but was available for work.
NEITHER WORKING NOR AVAILABLE FOR WORK (OR NOT IN LABOUR
FORCE):
13. attended educational institutions;
14. attended domestic duties only;
15. attended domestic duties and was also engaged in free collection of goods
(vegetables, roots, fire-wood, cattlefeed, etc.,) tailoring, weaving etc., for household use.
16. renters, pensioners, remittance recipients, etc.,
17. not able to work due to disability;
18. beggars, prostitutes etc;
19. others;
20. did not work due to sickness (for casual workers only)
(Sl.No. 7,8,9,10,12and 20 are applicable only in the case of current weekly and current
daily status approaches.)
(xiii) USUAL ACTIVITY STATUS:
The usual activity status relates to the activity status of a person during the reference
period of 365 days preceding the date of survey. The activity status on which a person
spent relatively longer time (major time criterion) during the 365 days preceding the date
of survey is considered the principal usual activity status of the person. To decide the
principal usual activity of a person, he/she is first categorised as belonging to the labour
force or not, during the reference period on the basis of major time criterion. Persons,
thus, adjudged as not belonging to the labour force are assigned the broad activity status
‘neither working nor available for work’. For the persons belonging to the labour force,
the broad activity status of either ‘working’ or ‘not working but seeking and/or available
for work’ is then ascertained again on the basis of the relatively longer time spent in the
labour force during the 365 days preceding the date of survey. Within the broad activity
status so determined, the detailed activity status category of a person pursuing more than
one such activity will be determined again on the basis of the relatively longer time spent.
(xiv) SUBSIDIARY ECONOMIC ACTIVITY STATUS:
A person whose principal usual status is determined on the basis of the major time
criterion may have pursued some economic activity for a relatively shorter time (minor
time) during the reference period of 365 days preceding the date of survey. The status in
which such economic activity is pursued is the subsidiary economic activity status of the
person. In case of multiple subsidiary economic activities, the major two activities and
their statuses based on the relatively longer time spent criterion will be considered . It
may be noted that engagement in work in subsidiary capacity may arise out of the two
following situations
(i) a person may be engaged for a relatively longer period during the last 365
days in economic/non-economic activity and for a relatively shorter period in another
economic activity and
(ii) a person may be pursing one economic/non-economic activity almost
through out the year in the principal usual activity status and also simultaneously
pursuing another economic activity for a relatively shorter period in a subsidiary
capacity.
(xv) CURRENT WEEKLY ACTIVITY STATUS:
The current weekly activity status of a person is the activity status obtaining for a person
during a reference period of 7 days preceding the date of survey. It is decided on the
basis of a certain priority cum major time criterion. According to the priority criterion,
the status of ‘working’ gets priority over the status of ‘not working but seeking or
available for work‘ which in turn gets priority over the status of ‘neither working nor
available for work‘. A person is considered working (or employed) if he/she, while
pursuing any economic activity, had worked for at least one hour on at least one day
during the 7 days preceding the date of survey. A person is considered ‘seeking or
available for work (or unemployed)’ if during the reference week no economic activity
was pursued by the person but he/she made efforts to get work or had been available for
work any time during the reference week though not actively seeking work in the belief
that no work was available. A person who had neither worked nor was available for
work any time during the reference week, is considered to be engaged in non-
economic activities (or not in labour force) . Having decided the broad current weekly
activity status of a person on the basis of ‘priority’ criterion, the detailed current
activity status is again decided on the basis of ‘major time criterion’ if a person is
pursuing multiple economic activities.
(xvi) SELF-EMPLOYED :
Persons who operated their own farm or non-farm enterprises or were engaged
independently in a profession or trade on own-account or with one or a few partners were
deemed to be self-employed in household enterprises. The essential feature of the self-
employed is that they have autonomy (i.e., how, where and when to produce) and
economic independence (i.e., market, scale of operation and money) for carrying out their
operation. The fee or remuneration received by them comprised two parts – share of their
labour and profit of the enterprise. In other words, their remuneration was determined
wholly or mainly by sales or profits of the goods or services which were produced. Self-
employed persons were categories as follows:
(i) Own-account workers: those self-employed persons who operated their
enterprises on their own account or with one or a few partners and who, during the
reference period, by and large, ran their enterprise without hiring any labour. They could,
however, have had unpaid helpers to assist them in the activity of the enterprise;
(ii) Employers: those self-employed persons who worked on their own account
or with one or a few partners and, who, by and large, ran their enterprise by hiring labour;
and
(iii) Helpers in household enterprise: those self-employed persons (mostly family
members) who were engaged in their household enterprises, working full or part time and
did not receive any regular salary or wages in return for the work performed. They did
not run the household enterprise on their own but assisted the related person living in the
same household in running the household enterprise.
(xvii) EARNINGS :
Earnings meant payments received in cash or kind or both cash as well as kind or those
that are receivable for the work done during the reference week. The kind wages were
evaluated at the current retail prices. Bonus and perquisites evaluated at retail prices were
also included in earnings. Amount receivable as ‘over-time’ for the additional work done
beyond normal working time was also included in the earnings.
(xviii) INDEBTED HOUSEHOLDS:
A household is considered as an indebted household if it has taken loan from others and
part or whole of which had remained outstanding on the date of survey. Loan included
borrowings in cash and/or kind and credit purchases made by the households. If the
nature, source and purpose of two or more loans are similar, they are treated as a single
loan. Borrowings in kind are evaluated at the retail prices prevailing in the local market
at time of borrowing. An advance payment received for forward delivery of goods is also
regarded as a loan. The dues on time of credit purchases, like newspaper, milk, services
of dhobi, etc., are also treated as loans.
(xix) HOUSEHOLD CONSUMPTION EXPENDITURE :
The expenditure incurred by a household on domestic consumption during the reference
period is the household’s consumer expenditure. The household consumer expenditure is
the total of the monetary values of consumption of various groups of items, namely, (i)
food, pan (betel leaves), tobacco, intoxicants and fuel & light, (ii) clothing and footwear,
and (iii) miscellaneous goods and services and durable articles.
For groups (i) and (ii), the total value of consumption is derived by aggregating the
monetary value of goods actually consumed during the reference period. An item of
clothing and footwear is considered to be consumed if it is brought into maiden or first
use during the reference period. The consumption may be out of (a) purchases made
during the reference period or earlier; (b) home grown stock; (c) receipts in exchange of
goods and services; (d) any other receipt through gift, charity, borrowing; and (e) free
collection. Home produce is evaluated at the ex farm or ex factory prices. For evaluating
the consumption of the items of group (ii), i.e., items categorised as miscellaneous goods
and services and durable goods, a different approach is followed. In this case, the
expenditure made during the reference period for the purchase of goods and services is
considered to be consumption.
It is pertinent to mention here that the consumer expenditure of a household on food
items relates to the actual consumption by the normal resident members of the household
and also by the guests, whether during ceremonies or otherwise. To avoid double
counting, transfer payments like charity, loan, advance, etc., made by the household are
not considered consumption for items of groups (i) and (ii), since transfer receipts of
these items have been taken into account. However, the item ’cooked meals’ is an
exception to the rule.
(xx) CHILDREN :
Persons below 15 years of age have been treated as children
PRESENT REPORT :
1.21 This is the first report in the series of five reports to be brought out on the basis of
seventh RLE covering different aspects of rural labour. It presents analysis of data on the
wages and earnings of rural labour households. It contains the basic results on wages and
earnings of workers of Labour Households at state and all-India level. It gives (a)
earning strength and the number of wage earners in the average size of Labour
Households; (b) data on wages and earnings of agricultural labour households workers in
agricultural and non-agricultural operations; (c) earnings of workers (men, women and
children) of agricultural labour households and rural labour households in different
agricultural operations; (d) level of real earnings in agricultural operations during 1999-
2000; and (e) comparison of wages of agricultural labour household workers with
Minimum Wages fixed by the State Governments for agricultural operations as well as
with wages paid to workers in organised sector (viz factories, mines & plantations).