Declining Wages, No Government Aid: Daily Wage Workers Are Stuck in a Deep Crisis

“Since the time of COVID-19 lockdown, there has been a severe crisis of employment opportunities in local labour markets. Getting work for even two days a week is difficult for us. Daily wages too, for any work possible, have dipped by half,” says Rajesh Singh, a young daily wage worker in his early 20s from a ‘mazdoor mandi’ (an unorganised labour market) in Lucknow, Uttar Pradesh.

The tragic tale of Rajesh Singh, struggling to make ends meet to afford two nutritious meals for his family, and the dwindling prospects for work is experienced by many daily wage workers standing beside him, all of whom travel from peripheral towns and villages near Rai Bareilly and Sultanpur to Lucknow in search for daily work. This reflects the nature and form of the economic catastrophe that has surfaced since the curfew-style lockdown sucked out employment opportunities for daily workers across unorganised and organised segments.

The trials and tribulations of this community – dependent on daily work and wages for survival – worsened since the lockdown, with only fleeting moments of respite. Even since August 2020, when ‘unlocking’ allowed for some activity to resume for an economic recovery to begin, the daily wage shramiks have continued to suffer acute economic distress due to limited job prospects, travel restrictions and poor execution of government support policies.

In a three-month extensive field study undertaken by our research team at Centre for New Economics Studies, O.P. Jindal Global University, we documented and archived narratives of over 200 daily wage workers – through a randomised survey across the mazdoor mandis of Lucknow (UP), Surat (Gujarat), and Pune (Maharashtra), aimed to understand the extent to which the current economic crisis is affecting the workers’ daily work prospects; has adversely impacted their incomes; and how little to no state support has forced many to borrow extensively through informal channels for making their ends meet, leaving most highly indebted, especially in Lucknow.

The reason for selecting Lucknow, Surat and Pune for this particular field study was based on the logistical ease, and given how each of these cities – in their own respective region – attract the maximum amount of intra-state and inter-state migrant workers and rely on them for most industrial, manufacturing and construction work.

Narratives from Surat: A crisis of employment driven by supply-side problems 

Positioned in a textile-sector dominated region, Surat, an employment hotspot for migrant workers from all over the country, attracts workers in thousands from Bihar, MP, UP, Jharkhand amongst others in North and Central India.

During the interviews undertaken, respondents (daily wage workers) indicated a sharp fall in their work and living standards post-lockdown, as a result of limited employment opportunities. Most small-scale cottage style textile workshops are working with less than 50% worker capacity and even for those working, wages have been less than half of what it was before.

Vijay, a small-scale power loom owner in Surat, cites chronic supply-side problems in the textile industry as a key contributor to this in the months after lockdown: “Pehle 10 karigar the, ab 7 hai, kyunki maal hi nahi aa raha hai, toh unko bithane ka koi matlab nahi hai… Sabka kharcha mere ko hi uthana hai (Earlier, we had 10 craftsmen working in a small unit. Now we have seven because we are not receiving raw materials. What is the point of employing new workers or asking others to come back if they just have to come here and sit idle? I need to pay for all their expenses too).”

Following up on Vijay’s conversation with us, we raised the same issue – of a breakdown in the supply of raw materials in the textile manufacturing space to Gujrat – with other textile unit owners and private contractors. It is a problem which most are facing now. During the lockdown phase, from March-June 2020, the inter-state transportation of raw materials had come to a halt.

As restrictions were relaxed during the unlocking phase, most small and medium scale manufacturers tried to gradually get back to business but government-imposed curfews and restrictions on mobility in many areas with a large number of COVID-19 cases, later followed by the farmers’ protests near Delhi’s borders, slowed down the distribution and transportation of basic goods required by craftsmen in Surat to produce even a saree. Vijay said before the lockdown, he used to produce scores of sarees daily to put out for sale.

The consequential fall in production capacity has severely affected the incomes of all craftsmen, as they usually work on a piece-rate system — i.e. for every saree produced, a worker would earn Rs 10. According to Vijay, workers used to earn as much as Rs 1200-1300 every day before the lockdown, which has now fallen to around Rs 450. Hence, even those who were fortunate enough to be employed by Vijay and other small and medium scale manufacturers during these difficult times now struggle to make ends meet.

Also Read: Women Informal Workers: Falling Through the Cracks in the Pandemic

Narratives from Lucknow and Pune

Waiting in the scorching heat after travelling long hours, daily wage workers across Lucknow and Pune begin their search for work in ‘mazdoor mandis’ from 7 am onwards. We visited mandis near the Engineering College, Daliganj and Aliganj in Lucknow and those near Warje bridge, Dattanagar Katraj, Mundhwa and Dange Chowk in Pune. With a few workers specialising as masons, construction workers, marble and tile workers, and plumbers, most experienced an acute fall in employment – even after November 2020, with limited repair work and construction projects being undertaken by the private builders.

To understand the intra-household allocation of incomes of these workers, their spending, saving and borrowing patterns, our team took around 100 interviews each in Lucknow and Pune. The average age of our respondents was around 36 years old in Lucknow and 35 years in Pune, with their households comprising of 5-6 members. Most were the sole breadwinners in their families. A closer look at their household composition reveals that the number of dependents (children and elderly) in the family – and their health costs – exceeded the number of earning members (and other budget heads), resulting in an additional burden.

Our data from Lucknow indicates that the mean monthly income (from labour work only) has fallen by 62%, that is, from Rs 9,500 per month in pre-pandemic times to Rs 3,500 now. In Pune too, the mean monthly income of an average worker fell from Rs 10,000 to Rs 4,500, a 54.5% decline.

Laxmi Rathod, a female worker in her 20s from Pune’s mazdoor mandi, says: “Lockdown mein ek rupiya nahi diya koi, 4 anna-paisa bhi nahi diya koi. Mangane gaye the aur lakdi se maara hai humko police ne. Bhikari jaise mangne gae the hum log khane peene ke liye (We did not even get a single rupee during the lockdown. Whenever we went and begged for some money or support, we were beaten up by the police. Despite that, we desperately had to beg to find some food).”

Sharp fall in employment prospects in the near future

Our survey results from Lucknow and Pune reveal a sharp fall in working days due to a demand-side shock that was gripping the economy and much of the real estate and construction sector (where most daily wage workers find work) even before the pandemic struck, and a subsequent wage-shock (from the lockdown induced economic crisis) where, for the same work and the same number of hours, each worker was being paid much less.

Data from Lucknow shows that pre-COVID-19 lockdown, the average working days were around 21 days a month, which fell to 9 days a month post the lockdown. In Pune, average working days in a month came down from 12 to 2 days. From responses received, most respondents stated that construction projects were halted and repair work was indefinitely postponed during the lockdown, and once the lockdown was lifted, there wasn’t enough demand (or funds for the small and medium scale owners) to begin work at the same scale as before.

Ansuiya, a migrant worker in her early 30s from a mazdoor mandi in Lucknow, shares her experience:

“Even after the lockdown most of those from outside the city haven’t been called for work. Those from outside the state are being discouraged to come and work. A few of us who managed to come here, when we sought work, prospective employers would say, ‘You have come from out of town and would have brought the virus with you!’, and would send us away.”

Such tales of rising discrimination against inter-state migrants, who found it difficult even before to get houses on rent, points to more restricted mobility for most workers.

Furthermore, difficulties in travel and commute for most workers – first to go back to their homes and then to return to cities – have translated into a rise in travelling expenses from Rs 56 to Rs 125 on average per month, as per data on transport expenses for each worker from Lucknow. Weary of spending extra on conveyance during times of financial distress, workers were forced to accept intermittent periods of unemployment.

A few interviews indicated that there were also instances where daily-wagers with larger families in cities, in light of not getting employed for a longer period and without support to travel back home, preferred staying back in the migrated city – and were forced to beg – just because they couldn’t pay the train fare to go back home (and no state buses were operational for a long time). Laxmi Rathod from Pune says, “I have 6 children, how could I have travelled with all of them? I have no money to pay for train tickets and buses weren’t functional.”

Woe of sharply declining wage rates

There has been a considerable plunge in wages of daily workers. In Lucknow, mean daily wages fell from Rs 430 to Rs 360/ per day. Similarly in Pune, wage rates fell from Rs 450 to Rs 390/per day.

Usually, wage determination in a given labour market is dependent on numerous factors: nature of work, identity, the average experience of the worker in a vocation, home state of the worker and more. Our researchers in Pune observed that workers who have worked in the city for a longer duration (for example, 10 years), began their wage negotiations at a higher wage.

The team also noted that all payment structures were not time-based (as per the countable days of work) – some workers get (or got) paid for the day regardless of the amount of work done, whereas for others, their wages are directly proportional to the effort and work performed. For example, we saw how brick-carriers at construction sites got paid for every floor they carry the bricks to, therefore, the more bricks they carry, the higher was their total wage. The rate for carrying bricks to 1 floor is around Rs 1 in Pune, which increases with each floor (rate for carrying bricks to the second floor is Rs 1.5, etc.)

Despite so many factors influencing the wage rate, there is limited variation in the daily wage within the same category of work. Construction workers were on average paid between Rs 400-500 daily before the pandemic, and painters were paid around Rs 700-800 daily.

This was consistently seen in most mazdoor mandis across Lucknow, which, for construction work, were found to have relatively fixed wages rates — workers here would prefer not taking up the job than working at a lower wage rate. In an environment of such strong wage inelasticity of labour supply, a 15% fall in overall wage rate now can be considered alarming, reflecting a sharp decrease in demand for (construction) worker services.

Mohd. Haroon, a mason, expresses this entire problem plaguing the mandis for months: “Earlier, wages were Rs 400-500, but now it is difficult to get work to begin with. Even if we are able to find work, wages are only Rs 200-300 per day.”

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With fewer privately funded infrastructure projects, and an increasing desperation for employment, the employer-employee power dynamic has changed since the pandemic. Employers – mostly private labour contractors – enjoy greater bargaining and market power and offer lower wages that many forlorn workers have no choice but to accept. In absence of any formal labour union support, or a formal mandi in place, many workers – who even before the pandemic had little agency or bargaining power as a collective, now feel more cheated and exploited. The state has done nothing in this regard.

Respondents (like Mohd. Haroon) cited many incidents that took place pre-pandemic when they were cheated out of their rightful wages too, when thekedars (contractors) would often impose heavy wage cuts for being ‘late to work’, even if the worker was late by just five minutes.

As per Ansuiya, when workers would protest, thekedars exerted their power: “They say, ‘Take it or leave it’, so what can we do?”

However, when workers started negotiating in groups and clusters, which happened near the Engineering College mazdoor mandi in Lucknow, they noticed that such incidents of exploitation took place less often. Most workers, left in a more vulnerable state now, favour state-supported unionised mechanisms that can help workers seek employment in smaller clusters (than on individual basis) and get collective bargaining power on issues such as wage-determination and on working condition standards (especially those working with their family with them on-site).

Expenditure and borrowing trends

From the survey data collected, overall spending by workers (from Lucknow and Pune) rose post-lockdown by Rs 5,000 on a monthly basis. A lot of this increase, as seen from the aggregate expenditure allocation from each worker’s household expenses, was attributed to debt-interest related payments, rental costs, healthcare costs, children’s education, and conveyance costs (that have substantially increased now).

The average number of in school children per daily wage worker household in Lucknow was approximately three, which implies a significant level of ‘educational spending’. However, the team found that for the sample of 48 participants in Lucknow, mean educational expenditure fell from Rs 560 to Rs 430 per month. This reflected how more and more parents with low incomes took their kids out of school (as schools shut and classes went online), or couldn’t educate them (in the absence of a smartphone).

Despite restrictions on movement and travel, the mean expenditure on ‘Conveyance’ in Pune has increased from Rs 890 to Rs 1,030 per month. This increase was not due to an increase in the frequency of travel, but rather due to a rise in the daily travel fare from Rs 60 to Rs 100. Respondents explained that due to the closure of public transport facilities and the imposition of social distancing restrictions, they had to explore more expensive, private transport networks to get to the mandis.

‘Medical expenses’ also for most workers’ households. The amount that a daily wage worker household would spend on healthcare increased due to a rise in the average spending on medicines from Rs 1,900 before the pandemic to Rs 4,700 per month since the pandemic and this increased spending was evident for those availing private healthcare services for maternal patients, pregnant women, or in treating non-COVID-19 related ailments for the elderly in the household. In a previous study, in Lucknow and Pune as well, we discussed how reproductive healthcare services and costs were impacted since the pandemic struck (for details see here).

In Figure 2, we see how consumption (%) increased for most workers in Lucknow as against Pune. Explaining this, and beyond the other overheads mentioned, a major overhead for expense for most workers was on ‘debt-related payments’, or simply on interest of borrowings. Almost every borrower, as studied, availed larger sums of money through intra-community borrowings at informalised interest rates, as borrowing institutionally through banks wasn’t possible (due to lack of proper paperwork and security ownership).

This pattern of ‘informal lending’, as reported by workers in our interactions, informed us how in most cases a lender charged 5% for every Rs 100 taken as loan. On asking why it was necessary to borrow at such high and exploitative interest rates, most workers (especially from Lucknow) cited two reasons: for increased medical expenses, and for household weddings (mostly for dowry-related expenses, where ‘marriages had been already fixed prior to the pandemic’).

The missing link: Absence of government support?

The ‘aam’ worker during a pandemic struck catastrophe was forced to become more and more ‘nirbhar’ on debt-entrapping, ultra-exploitative, asset owning class of workers (and informal money lenders), which has only made their living condition worse over time.

Despite the government’s efforts to ensure food security during the months of the lockdown and thereafter, most workers were unable to avail the benefits of receiving ration packages. Poonam Sahu, a daily-wage worker from Lucknow, resents:

“As far as I am concerned, the government can say whatever on paper, or in person about providing (food) aid and support. Daily wage workers have been living through a horrid period and none of the announced government measures are to be seen. It didn’t help the workers in any way.”

The interference of bureaucratic intermediaries and the need for an ID and paperwork to receive food packages resulted in making more workers being forced to fend for themselves.

Aklima, a worker staying with her two kids, did not receive the much-touted government food support. She says, “We didn’t get ration here. Where and when do we get ration? Whatever we get, we need to buy it. If we work hard, we eat. Otherwise, we remain hungry.”

Ansuiya’s statement quite tragically sums up the situation of these essential yet unsecured working group:

“If we ask for help, who will extend it? People send us away by saying, ‘What can we do to help you if you have come to earn money?’ This is what they tell us. So, help is never on offer. What we can get is ‘work’. At least that will help us manage our livelihood. Else, it is we who suffer and die.”

Names of all respondents have been changed to protect their identity.

Deepanshu Mohan is associate professor of economics and Director, Centre for New Economics Studies (CNES), Jindal School of Liberal Arts, O.P. Jindal Global University. Jignesh Mistry is senior research analyst and the Visual Storyboard Team Lead, CNES. Advaita Singh, Sunanda Mishra, Snehal Sreedhar, Shivani Agarwal and Vanshika Mittal are all senior research analysts at CNES. Ada Nagar is a research assistant at CNES. This story is produced as a part of the Visual Storyboard initiative of CNES. Please click here for a playlist on video essays and here for photo essays produced from this Storyboard.