What NREGA did: Rural women knocked out of real jobs

Over the last few years, data put out by the government seemed to be showing a strange phenomenon. The participation of women in the rural labour force was going down.
The 2005 round of the National Sample Survey Organisation (NSSO) showed that women made up around 33.3 percent of the rural labour force. By the time the 2010 round came, this number had fallen to 26.5 percent. The labour bureau survey for a period of one year ending on 30 June 2011 also seemed to suggest the same.
The explanations offered for this phenomenon were rather lame.

As Akhilesh Tilotia of Kotak Institutional Equities points out in his latest GameChanger Perspectives report, “Both the NSSO and the Labour Bureau surveys pointed out the low or declining labour force participation of women, especially in rural India…There was no clarity on why women were dropping out of the workforce: Some experts thought women may have started spending more time in education and skill development, or the data collection itself may have been faulty.”

The explanations offered for women moving out of the rural labour force have turned out to be incorrect. The women, it seems, have been moving to work under the National Rural Guarantee Employee Act (NREGA) rather than dropping out of the labour force totally.

With the government guaranteeing work under NREGA, rural wages have been on their way up for some time now TABLE1

The accompanying table shows us exactly that. In 2007, women took on around 40.6 percent of the total persondays of work offered under NREGA. By 2012, this number had gone up to 48.2 percent.
As Tilotia explains, “We note that women form a disproportionately large group in NREGA person-days as compared to their proportion in the rural labour force (see table). This leads us to believe that women who are increasingly being priced out of the agricultural labour market are taking shelter in NREGA work schemes.”
With the government guaranteeing work under NREGA, rural wages have been on their way up for some time now. Another impact because of this has been the narrowing of wages between men and women.

Table two and three
Table two and three

As Tilotia puts it, “Across many agricultural activities, the premium that men used to command over women in terms of per-day wage has shrunk significantly. This is seen most prominently in ploughing, but is also true for sowing, weeding, transplanting and winnowing (as can be seen in the two tables that follow)…Even as mechanisation of agriculture has taken place over the last decade, there is still significant physical labour involved: The labour productivity has not meaningfully increased in many of the occupations noted above. In such a case women, whose wages have gone up much more than men’s, become less profitable to employ for a farm-owner. We hypothesise that the implementation of a minimum wage has meant workers with low productivity have been priced out of the market.”
And as women have been priced out as farm workers, this has led to women moving to working for projects under NREGA.
This may not be a good sign though, given that working for projects under NREGA hardly means any meaningful upgrade of skills for women, something that would help them earn more beyond NREGA. “Ideally the focus should be on improving the productivity of the female workforce via skill development: This would enable them to move beyond the minimum-wage band and command an employment opportunity on merits,” writes Tilotia.
Farmers also seem to be moving towards more mechanisation. A possible explanation for this is that higher farm wages probably are now making mechanisation increasingly financially viable. (though Tilotia doesn’t make that conclusion in his report).
This is borne out by the increasing number of tractors that have been sold since 2007. AnICRA report points out that the number of tractors sold by Indian companies stood at 346,508 units in the year ending 31 March 2008. This was expected to go up to 605,192 units for the financial year ending March 2012.
And these factors have also contributed to an increasing amount of food inflation in the country. The number stood at 11.88 percent for the month of January 2013. These are the unintended consequences of the NREGA.
The article originally appeared on www.firstpost.com on March 2, 2013
Vivek Kaul is a writer. He tweets at @kaul_vivek