Compelled to Work for Wages: The Story of Old-Age Wage Labour Participation in India

The well-being of the elderly in any society is important as improved health facilities and policies have made the elderly population among one of the fastest growing demographic groups in the world today. In India the elderly population has grown from about 19.8 million in 1951 to 100 million in 2011 and the projections indicate that the number of persons older than sixty years is likely to increase to 198 million by 2030 (Government of India, 2008; ET, 2012). The growing share of the elderly population may have severe consequence in a country like India where the credit and financial markets are not adequately developed.

Traditionally the elderly in India have relied on the cultural norms and joint family system for social and economic security for a long time. However, with fast urbanisation (with limited and costly housing in urban areas) and higher aspirations among the youth, traditional support to the elderly from their children is decreasing. As a result, the elderly in India are likely to be exposed to emotional, physical and financial insecurity. That said, it is time for the government to extend financial, emotional and social security to include the elderly. Currently, there is only one scheme directed towards the elderly population in India, the Indira Gandhi Old Age National Pension Scheme (IGOANPS), but it only covers the “Below Poverty Line (BPL)” population above 65 years of age. However, the size of the BPL population is arbitrarily fixed by the Planning Commission at a very low level and a very low amount of pension money is given to the beneficiaries. On top of this, workers in the informal sector, which employs more than 70% of the total workforce, receive no pension benefits and regular salaried individuals receive a one-time gratuity based on the final salary and provident fund contributions that are made while working. This results in increased wage labour participation, even in the older ages, out of adversity. In simple terms, by wage labour participation we mean working for wages.

In our recent work (Singh and Das, 2015) using nationally representative data from the National Employment and Unemployment Surveys (1993-94 and 2009-10) we found that the negative association between age of elderly and wage labour participation has decreased during the period 1993-2010. Additionally, rural elderly from the weaker sections of society (Scheduled Castes [SCs] and Tribes [STs]) had a higher probability of participating in wage labour than those belonging to the other castes in 2009-2010. However, in the period 1993-1994, only the elderly belonging to the SCs category had a higher chance of participating in the wage labour market. A possible explanation for this finding is that STs in India have typically resided in physically isolated forests and mountainous regions with their livelihoods depending on the produce from the forests. Therefore, their significantly higher chance of wage labour participation in the period 2009-2010 might be explained by deforestation and other changes related to economic development. The significantly higher probability of SCs elders to participate in the wage labour compared to elderly from the other castes is not surprising given that SCs in India constitute the major part of the agricultural labourers and the landless labourers in the rural areas. Further, in the rural areas elderly from agricultural and other labourer households were significantly more likely to participate (and more so in 2009-2010) in wage labour than the self-employed in agriculture, self-employed in non-agriculture and other households. This finding indicates that older individuals from poorer households have more compulsion to work for wages than those from other households and the situation has worsened during the period 1993-2010. The situation is similar in urban India, where elderly from casual labour household types are significantly more likely to participate in the wage labour (and more so in 2009-2010) than the relatively richer households. It highlights that the elderly from poorer households are becoming more compelled to work for wages than ever. In addition, the elderly from smaller families (4 or less household members) are also more likely to participate in wage labour in both rural and urban areas than those from larger families. This is an important finding for Indian society which is experiencing a transition from a joint family system to nuclear families. Given the fast pace of this transition, more and more elderly will need governmental support or will otherwise be forced to work for wages. Last but not least, in any society, individuals above retirement age should work fewer days than those who are younger. This is not the case in India where the number of working days of the elderly does not have a significant relationship with age.

To address the problem of poverty among different sections of the Indian population, the Government of India has initiated a few policies; the most recent being the popular Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA). However, the elderly population is often unable to participate in the program due to the physically demanding nature of work that is supported by the MGNREGA. Thus, currently the only governmental social welfare program for the elderly population is the IGOANPS. But, as mentioned before, this suffers from some serious shortcomings and limitations both in terms of coverage as well as the amount of pension that it provides. It is time for increased attention from the government to provide adequate social security benefits to the elderly population. Clearly, two policy decisions need to be taken. First, the government needs to increase the amount of pension provided by the IGOANPS and synchronize it with some basic amount needed for subsistence. Second, the coverage of IGOANPS should be extended to include all elderly individuals. Alternatively, another pension scheme should be introduced to provide social and financial protection for the elderly in India.

This post has been jointly written by Ashish Singh, Assistant Professor at the Indian Institute of Technology in Bombay, and Upasak Das, Assistant Professor at the Centre for Development Studies in Thiruvananthapuram.

References:

Economic Times. (2012). Elderly to constitute 20 per cent of India’s population by 2050: Report. The Economic Times, October 1, 2012.

Government of India. (2008). Integrated Programme for Older Persons: A Central Sector Scheme to Improve the Quality of Life of the Older Persons. New Delhi: Ministry of Social Justice and Empowerment.

Singh, A. and Das, U. (2015).  Increasing Compulsion to Work for Wages: Old Age Labor Participation and Supply in India over the Past Two Decades. Journal of Population Ageing, 8(4): 303-26.


This entry was posted in Ageing, Health, Inequality and Poverty, Pensions, Welfare by Ashish Singh. Bookmark the permalink.
Ashish Singh

About Ashish Singh

Ashish is an Assistant Professor at the Indian Institute of Technology Bombay, India.  His research and teaching interests include economics of discrimination, distribution, social exclusion and underdevelopment. He also works in the areas of public health and demography. His work has appeared in leading journals including Review of Income and Wealth, Social Indicators Research, Oxford Development Studies, European Journal of Development Research, Journal of Poverty, Population Research and Policy Review, PLoS One, Maternal and Child Health Journal, BMC Pregnancy and Childbirth among others.

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