In recent news, the Indian government announced that they have officially updated the base year for the Wage Rate Index (WRI) to 2016, replacing the old series based on the 1963-65 period. The WRI measures the fluctuations in wage rates over time, however, a high or low WRI does not necessarily reflect high or low wage rates in a particular industry as compared to others. A base year is utilized as the starting point of an economic or financial index and is customarily set at an arbitrary level of 100.
Key Updates on the Wage Rate Index
The Ministry of Labour & Employment has released a fresh series of the WRI with the base year set to 2016. This index is compiled and maintained by the Labour Bureau, an organization affiliated with the ministry. The choice to update the base year was made following the recommendations of both the International Labour Organization and the National Statistical Commission.
Unlike the previous series, which was updated yearly, the new WRI will be refreshed every six months, on the first day of both January and July.
Expanded Focus and Coverage of the New WRI Series
The recently released WRI series has expanded its scope and coverage across various occupations and industries, compared to the previous series. From the 37 industries covered in the new series, 16 are newcomers, including textile garments, footwear, and petroleum sectors, all of which fall under the manufacturing sector.
In this iteration of the series, the oil mining industry has replaced the mica mines industry, making the mining sector more inclusive of the different types of mining; namely coal, metal, and oil.
Meanwhile, three plantation industries – tea, coffee, and rubber – have been sustained in the WRI basket, albeit with increased coverage. The top five dominant industries – motor vehicles, coal mines, textile garments, iron & steel, and cotton textiles – collectively constitute 46% of the total weight.
Anticipated Advantages of the Revised Base
The updated base year is expected to provide a more representative depiction of the wage trends in various industries, which is integral in determining the minimum wages, national floor wages, and other related factors. This revision is part of the government’s regular updates to the base year for key economic indicators, aimed at reflecting the evolution of the economy and capturing the income pattern of workers.
Moreover, the new WRI series will aid employers in formulating appropriate human resource strategies.
WRI Statistics for 2020
According to recent data, the All India Wage Rate Index Number for all 37 industries reached 119.7 in the second half of 2020, marking an increase of 1.6% from the index recorded in the first half of the same year.
Sector-wise, the highest WRI in the latter half of 2020 was found in the plantation sector, followed by the manufacturing and mining sectors.
Highest and Lowest Wage Rate Index for 2020
Among specific industries, the highest WRI was found in the drugs & medicines industry, trailed by sugar, motor cycles, jute textiles, and tea plantation sectors.
On the contrary, the lowest WRI was registered in rubber plantation, with paper, castings & forgings, woollen textiles, and synthetic textiles following suit.
