Be it due to migration (leading to short supply of labor) or increasing demand for workers or adjustment of wages in line with the rise in cost of living, the fact is that wages for agriculture and unskilled workers are increasing. Importantly, in the agriculture sector, both men and female saw equal increase in wages in 2010/11. Wages for both gender increased by 32 percent. Meanwhile, in regular daily unskilled work (jyami), male saw higher increase in wages than female (29 percent and 25 percent respectively). Earlier, female wage increase outstripped the increase in wage of male (except in 2008/09).
The increase in wage is higher than overall inflation. For instance, 2010/11, overall inflation was 9.4 percent (with food and non-food inflation at 14.66 percent and 5.39 percent), much lower than the increase in wages.
Notice that food prices have consistently outstripped overall inflation after 2004/05 (the base year for CPI). In overall CPI index, the weight of food and beverage is 46.82 percent and that of non-food and services is 53.18 percent. The interesting thing is that despite having a lower weight on overall index, food prices have dragged it higher (it is also influenced by inflation in India and global petroleum prices, which justifies a third of the variability of domestic prices). No wonder food prices have increased drastically in the retail market. More on inflationary dynamics in Nepal here.
Few things to note here.
- The overall increase in wages might be due to wage adjustment with inflation, shortage of workers (mostly due to migration for unskilled work overseas and increase in leisure time allocation arising from rise in income, thanks to remittances), and high demand for unskilled labor in agriculture and construction sectors.
- Though both male and female have seen similar increase in wages, it doesn’t mean that their actual wages are same, i.e. growth of wages is different than actual wages. In terms of actual wage, female’s might be catching up with male’s. That said, wage growth disparity for both gender is leveling off.
- Mean daily wage in agriculture sector increased to Rs 170 in 2010/11 from Rs 75 in 2003/04. Mean daily wage in non-agriculture sector increased to Rs 263 in 2010/11 from Rs 133 in 2003/04. It shows that mean daily wage in agriculture sector increased more than in non-agriculture sector (127 percent and 98 percent respectively) over the same time period.
- The base year for inflation is 2005/06 and that for wages is 2004/05.
- More research is needed on the changing dynamics of wages for both gender, its causes, sustainability and implications for development and growth.
