National minimum wage plan
The Union labour ministry has decided to go slow in bringing in its much talked about mandatory national minimum wage, five months after it passed the labour code on wages. The move comes against the backdrop of growing opposition to the government’s labour reforms. After wage code act and draft wage code rules, it has also put an internal committee working on the minimum wage into hibernation, at least two government officials said requesting anonymity. It is not a priority right now. There are challenges at hand both at the micro and macro levels for us.
- There are three challenges to the setting of a national minimum wage. These include a growing opposition and protest from the working class to the marginal hike, feedback that hiking the minimum wage may impact industries in a difficult economic environment, and a recent amendment on law on parents’ welfare that will have direct bearing on fixing a national minimum wage.
- The working class is demanding a significant rise in mandatory minimum wage as part of the wage code, instead of a marginal hike of 10% over the existing voluntary floor wage of ₹176 per day.
- Only four states pay less than the existing voluntary national floor wage, that too only in a few sectors. Nagaland is the only state where the minimum wage range of ₹115 to ₹135 per day across sectors is less than the existing national minimum floor wage, according to government data.
- The economic survey presented in Parliament on 4 July had mentioned that a well-designed minimum wage system “can be a potent tool for protecting workers and alleviating poverty, if set at an appropriate level that ensures compliance". The economic survey had indicated that a higher minimum wage will have little impact on job creation.
- A labour ministry panel had said in its report in January that “the single value of the national minimum wage for India should be set at ₹375 per day as of July 2018".
- The seven-member panel had suggested that a housing allowance of ₹1,430 per month should be provided for city-based workers in addition to the minimum monthly wage of ₹9,750.
- The government junked the report but is now apprehensive that any mandatory minimum wage that is not close to this figure will be criticised.
- However, fixing a national minimum wage above ₹300 will impact industries and increase their employee cost at a time that they are facing difficulties because of the economic slowdown. The gross domestic product growth in the September quarter was 4.5%, the lowest in 25 quarters.
- The Maintenance and Welfare of Parents and Senior Citizens Bill, 2019, recently tabled in Parliament, has also highlighted the need for a nuanced minimum wage.
- At present, the minimum wage is calculated by taking into account four people—husband, wife, and two children. Now parents will also be expected to be taken into account while deciding the minimum wage. This aspect needs some discussion before it is made part of the minimum wage calculation.
- During discussion related to wage code, we have told them that the government must calculate the minimum wage based on six units—worker, spouse, two kids and parents.
- However, the government is not even coming up with its own pronounced mandatory minimum wage even five months after passing the wage code.