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Minimum wages act: With eye on basic wage rate, Centre plans amendments

The objective is to ensure that a standard minimum wage rate exists for all kinds of occupations.

Written by Surabhi | Ahmedabad/gandhinagar/new Delhi, New Delhi |
August 24, 2015 12:55:48 am
NDA government, Minimum Wages Act, labour ministry, minimum wages, minimum wages payable, provident fund, medical insurance enployees, Minimum Wages Act 1948, labour ministry, EPF, Indian express, business news Fresh amendments are being readied to incorporate these changes to the Minimum Wages Act of 1948, including a move to do away with multiple distinctions and categories for minimum wage thresholds.

The government is seeking to significantly boost incomes of the country’s lowest paid workers by substantially raising the minimum wages payable to them, mandating payments through formal banking channels and ensuring they get social security benefits like provident fund and medical insurance.

Fresh amendments are being readied to incorporate these changes to the Minimum Wages Act of 1948, including a move to do away with multiple distinctions and categories for minimum wage thresholds.

“The objective is to have a standard minimum wage rate for all occupations be it a factory worker or a domestic help. There should be no variation,” said a senior labour ministry official.


The labour ministry is also working on a fresh formula to calculate minimum wages taking into account the poverty line and court judgments as well as the wage cap for the EPF and other related schemes.

“The current minimum wages are very low, in fact so low that it would be difficult for a worker to subsist. It has to be significantly increased,” the official stressed, adding that it would continue to be revised based on the CPI-IW.

The move, which is a long standing recommendation of the Indian Labour Conference, is expected to help the NDA government win brownie points with trade unions representing employees who have often called the government anti-labour for its initiatives to reform archaic labour laws.

The National Floor Level Minimum Wage was revised by the Centre to Rs 160 per day from Rs 137 with effect from July 1 this year, after a gap of two years. This translates into a minimum wage of Rs 4,800 per month, though it is expected that states would ensure that it is higher than this rate for all occupations.

At present, the Act provides for fixation of minimum wages of the workers engaged in the 45 scheduled employments in the Central sphere and 1679 in the state sphere. While the Centre fixes the floor level for the minimum wage based on the consumer price index for industrial workers (CPI-IW), state governments from 1991 began to fix the minimum wages for each occupation based on local conditions.

The fresh amendments being drafted would focus on three issues, the official said.

“Apart from a common uniform wage structure across all occupations, the amendments would also make it mandatory for payments to be done through banking channels and promote employment through staffing federations,” he said.

Ensuring that salaries are paid through formal banking channels like NEFT, RTGS or transfer into bank accounts through employers would ensure that contractors or middlemen do not take a “cut” of the worker’s wage, said the official.

Additionally, the labour ministry is hopeful that this would provide some job security to workers along with proof of employment that is required for social security schemes such as the Employees’ Provident Fund and the Employees’ State Insurance.

The amendments, still being finalised by the labour ministry, would also encourage employers to employ workers through staffing federations or employment exchanges, the official said.

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