How much do India’s factory workers earn on average?
At constant prices, daily earnings of factory floor workers in the formal manufacturing sector recorded a compounded annual growth rate of only 0.6 percent between 2002-03 and 2021-22
On average, a worker in India’s factories earned INR 563 as a daily wage in 2021-22, data from the Annual Survey of Industries (ASI) shows. This varied greatly by who the worker was. Workers employed directly by factories earned INR 586 as their daily wage on average – but while male workers earned INR 630, female workers earned only INR 389 on average. Further, contract workers earned INR 523. On the other hand, those working as supervisors and managerial staff, earned INR 3,219 per day on average.
Various scholars have argued that there has been a stagnation in the real wages of the workers (see for example, here, here and here). This also seems true of India’s formal manufacturing sector. Real wages of India’s industrial workers have recorded little growth between 2002-03 to 2021-22, the latest year for which data is available, ASI data shows.
This analysis is based on average daily earnings that have been calculated by dividing the average wage/salaries paid in a year per factory unit by the annual average number of person days paid in a year per factory unit. To arrive at the real wages, at 2011-12 prices, Consumer Price Index for Industrial Workers (CPI-IW) has been used as a deflator. We consider factory floor workers as well as supervisory and managerial staff for this analysis – the former include both directly employed workers and contract workers. A gender breakdown is available for directly employed workers, but not for contract workers or for supervisory and managerial staff.
At constant prices, daily earnings in the formal manufacturing sector for floor workers recorded a compounded annual growth rate of only 0.6 percent between 2002-03 and 2021-22. However, the trend was not uniform across this period.
The average daily wages for floor workers ranged between INR 265 and INR 280 in the first 10 years, from 2002-03 to 2011-12 with 2003-04 recording the highest average daily wage at INR 279. However, 2012-13 onwards, there have been fluctuations in average daily wages ranging between INR 230 and INR 307. While the Covid-19 pandemic had its impact, it is important to note that the average daily wages of industrial workers witnessed a significant drop even before the pandemic. At constant prices, the average daily earnings of workers decreased from INR 298 in 2017-18 to INR 235 in 2018-19, a drop of 21 percent, and further to INR 230 in the following year (2019-20). The wages recovered and rose to INR 261 in 2020-21 and INR 307 in 2021-22.
Among all workers, the average wages of workers directly employed by factories have grown at a compounded annual growth rate of only 0.4 percent since 2002-03, while those of contract workers have grown at 2.5 percent. Despite this, the average daily earnings of the contract workers remained below the directly employed workers in all years (barring 2018-19) in the formal manufacturing sector.
Among workers directly employed by factories, women’s wages have witnessed a compounded annual growth rate of 2.1 percent between 2002-03 and 2021-22, whereas for male workers, the average daily earnings have remained stagnant, and have grown at a compounded annual rate of only 0.2 percent in the same period. Female workers have the lowest average earnings among all workers, and the higher nominal increase in their wages is likely due to this lower base. As a consequence, despite higher growth, the gender wage gap remains wide. The average daily earnings of a male worker in 2002-03 were INR 332 at constant prices, 2.3 times that of a female worker who earned INR 143 on average. This widened to 3.8 times in 2019-20 when women’s wages dropped to INR 87 in contrast to average earnings of men (INR 332). In 2021-22, this gap had narrowed back closer to pre-pandemic levels, and on average, a male worker earned 1.6 times that of what women workers earned on average.
It is noteworthy that while the daily wages have remained stagnant for floor workers across years, the average daily earnings for supervisors and other managerial staff have recorded a relatively higher growth rate. Between 2002-03 and 2021-22, the average daily earnings of this group of industrial workers grew at a compounded annual growth rate of 3.1 percent. At constant prices, the average daily earnings of supervisors increased from INR 980 in 2002-03 to INR 1,758 in 2021-22 (Figure 2). As such, the wage gap between the two categories of workers has been widening over the years. Previous research by Radhicka Kapoor (2020) and Pankaj Vashisht (2023) has also found that the gap between the earnings of the two have started widening after the 2000s.
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