Agricutural Labour Market - A Synoptic View

The paper reviews the forces affecting supply of and demand for agricultural labour in India, their interaction as expressed in wage levels; and, the characteristics of the agricultural labour market. The simplistic assumption of perfectly elastic labour supply cannot be sustained at the empirical level. Labour supply ought to be measured in terms of mandays available for work at relevant wage rate for a specific period. This needs knowledge of the number of agricultural workers and the participation rate. In the past, for various reasons, the former increased phenomenally and the latter only marginally. However, in the short-run these factors which influence the supply are beyond the reach of policy measures. The demand, on the other hand, is more amenable to short-run policy measures. Studies are available both on the estimational and diagnostic aspects of demand. According to one view, ensuring full employment involves labour transfer to non-farm sector. However, the required growth in non-farm employment is too high for this alternative to be practical. In this context the role of the labour absobring agricultural strategy, like HYV programme, is emphasized. A snag in this strategy is that the high peak period demand may induce mechanisation and may, thus, reverse the trend in labour absorption. On the wages issue it is agreed that adequate information on real wage rates is lacking. Nevertheless a rise in real wages in several regions especially during the HYV period is indicated. This overview of labour market highlights the relevance of the demand-supply framework in wage determination. What is needed is to understand appropriate variables influencing demand and supply at disagagregate levels.