What does demand for rural labor indicate about the state of the rural economy?
In the ongoing series on tracking the agro-rural economy, we've so far covered:
- Rainfall departures
- Fertiliser sales
- Agricultural commodities and farm output
In this article, we move to yet another important economic input: labor.
MNREGA
The Mahatma Gandhi National Rural Employment Guarantee Act, is a national scheme that ensures minimum 100 days of employment for people in the rural areas at a fixed wage. The scheme has been a huge success and in times of an economic downturn, the current government has relied on the MNREGA to address rural distress.Read our blog on how the current government relied on the scheme that it once criticised: A bane in 2014, now a boon?The data from MNREGA tracks how many people had applied for work under the scheme, and how many people actually got employed.
However, there is some nuance here while interpreting data from the MNREGA. A higher number of people employed under MNREGA does not necessarily bode well for the economic aspirations of the district or the country. The type of work under MNREGA is often classified as distressed labour and the payments are often delayed and way below the market prices.
Hence, the higher the number of people demanding work under MNREGA, the higher the rural distress.
? The share of people who actually got work as a percentage of the total people demanding work is a good indicator of how many people were able to secure minimum wages in the month.
Tracking labor demand under MNREGA
Currently, on the Sales pulse, there are two indicators that capture the labor demand:
- Households / people demanded work
- Households / people worked
A very high percentage of demand met (>100%) could indicate that the demand for labour was much higher than what the government projected (high rural distress).
A low percentage of demand met could indicate that despite high rural distress, the government was unable to meet it with employment opportunities.
What do these indicators mean for the rural consumption?
Higher people demanding work under MNREGA has proven to be highly correlated with economic distress. The presence of rural distress in the districts could indicate the potential fall of consumption in the coming months.