Unemployment dole vs. 'Minimum Wages'

There was a news item in the Economic Times page 11 today that the Central Govt. is trying to deal with the fallout of the Karnataka High Court order last year (for equalization of MNREGS (Mahatma Gandhi National Rural Employment Guarantee Scheme) wages with those mandated under Minimum Wages Act) by revising the wages, while simultaneously going in for an appeal to the Supreme Court.

My take: Decide first whether it's a dole (which is support for the poor) or proper 'employment' (which should lead to creation or value addition of certain economic goods)?  Has there been any sort of evaluation of the 'projects' undertaken under MNREGS to understand whether they're really useful to the rural economy or society - that is, those projects which are actually carried out, not the ones which remain only on paper and become a tool for rural/intermediate level functionaries to loot money.  If not, let's treat this purely as a dole, and not talk about parity with Minimum Wages which are paid for proper employment.

 

It seems some state governments, in the garb of supporting a socially progressive scheme, are going overboard raising MNREGS 'wages' to those mandated under Minimum Wages Act.  Treating it as another one to hand out largesse, on the same lines as the 'Rice at Two Rupees' and such other schemes, which have in the past led to virtual bankruptcy of the concerned state treasuries.  

Already, in the past few years, there have been huge demographic shifts in the rural workforce earlier coming to work in the farms of Punjab etc. and on construction projects.  Now many of them prefer to stay in their villages and take advantage of MNREGS.  This has led to huge rises in wages in these sectors due to severe shortage of manpower.  

Now, it may be said that the rise in wages, coupled with more leverage in the hands of workers, may not be a bad thing in itself – at least it’s paid for proper hard work (though there probably needs to be better management of rising industrial tensions, ref. the recurring cases of industrial unrest in Gurgaon-Manesar belt).  Bottomline: it's still payment for legitimate economic 'work'.

 

This Budget, they announced the intention to bring in an 'urban' employment guarantee scheme.  Before expanding the scope of such schemes, can we have a national consensus to treat wages as wages (with all associated privileges) and dole as dole.  Else there may be long term effects on the labour market which the politicians may not visualise now (or, even if they do, choose to turn a blind eye to, for political gains).

There’s always a danger that we may create whole generations of young people (a la US or even partly like Germany) dependent on dole, and on a much more massive scale than in other countries.