At a time when India is feeling the heat of global financial turmoil, a study by the International Labour Organisation (ILO) has predicted a rise in income inequality due to the meltdown. India already ranks ninth among developed and advanced economies where disparity between wage and productivity growth widened in the last 15 years, according to the ILO.Between 1990 and 2007, the period that saw India liberalising its economy, productivity growth exceeded wage growth substantially. While growth in productivity was over nearly five per cent during this period, real wages grew by only one per cent, found the study entitled “World of Work Report 2008: Income inequalities in the age of financial globalisation”.Out of the 32 countries surveyed by the ILO, China's productivity-wage growth ratio was found to be the best while Brazil fared the worst. China offered the best wages to its workers with its productivity-wage growth ratio standing at 9:10 while Brazil’s productivity-wage growth ratio was a dismal 3.5: -3.5. India ranked ninth on the list.The gap between high- and low-income earners is also widening in India.“The wage gap between the highest 10 per cent and lowest 10 per cent earners has tended to increase. The highest wage dispersion (variation in wages) occurred in Brazil, China, India and the United States and the lowest in Belgium and the Nordic countries,” the study found.What is worrying more for India is the ILO’s prediction that the financial slowdown will result in diminishing of employment gains in developing economies and that it will also affect low-income groups disproportionately.The study underlines that low-income households are likely to be more adversely affected because they spend a large proportion of their income on food products whose prices are rising. “Food price inflation affects those who spend a larger proportion of their income on food, in particular poorer households. For example, the poorest households in urban India experienced an estimated drop in purchasing power of over five per cent while the richest in urban areas in 2007 experienced only a drop of 2.2 per cent,” the study said.Touching on the labour scenario, the study said informal employment, already common, was becoming even more widespread in India and at the same time the casual workers earn 45 per cent less than regular employees. “Temporary jobs pay, on average, 20 per cent less than permanent jobs. In Latin America, workers with informal jobs earn, on average, 43 per cent less than workers with formal jobs while in India, casual workers (who form the bulk of informal employment) earn 45 per cent less than regular employees,” the study said.
