Strengthening Wage Policies to Protect Incomes of the Informal and Migrant Workers in India

Abstract

The Government of India is leveraging wage policy as a part of overall fiscal policy actions to protect the income of the informal and migrant workers affected by the COVID-19 pandemic and resultant lockdown measures. The statutory minimum wages through its redistributive mechanism and MGNREGS wages as an effective fiscal stimulus, could help alleviate the hardship faced by the informal workers and returnee migrants. However, for wage policies to act as an effective antidote, wage levels and their adequacy along with full implementation are of paramount importance. In this context, the paper argues that the level of both statutory minimum wages and MGNREGS wages are very low in India, and several implementation bottlenecks inhibit them from delivering results. It limits the very effectiveness of wage policies, unless prompt actions are taken to strengthen and revamp these policy tools. Under this backdrop, this paper provides an alternative framework for setting and revising minimum wages and MGNREGS wages at an adequate level. This is expected to significantly strengthen the current wage policies in addressing their stated objectives of reducing poverty and inequality while supporting a human-centred economic recovery process.

Keywords: India, COVID-19, wage policy, minimum wage, floor wage, MGNREGS wage, poverty, inequality, informal worker, migrant worker

JEL Classification: J3, J31, J38, J46, J48, J65, J83