The Economic Survey 2018-19, released Thursday, makes a strong argument for rationalising the current minimum wage system in the country in line with the revised version of the code on wages bill approved by the Union Cabinet on Wednesday.
At present, minimum wages are fixed on the basis of the skill level, geographical areas, nature of work. This has led to a proliferation of minimum wages, making enforcement a challenging task. The Survey’s recommendations, in line with the revised code, entail fixing minimum wages based on either the level of skill — different wages for the unskilled, semi-skilled, skilled and highly skilled — or the geographical region, or both. This simplification in the structure is expected to bring down the number of minimum wages to 300 from about the 2,500 wage rates that exist today.
Under this architecture, the Centre would notify a “national floor minimum wage” that could vary across the five geographical regions identified in the survey. This would serve as a “floor wage”. States have the option of fixing the wages at higher levels. Further, these wages, which would be regularly adjusted, presumably by the state-wise consumer price index for industrial workers, should be extended to all sectors of the economy, covering both the formal and the informal sector, recommends the Survey.
Shifting to this architecture would bring about uniformity in minimum wages across the country, making “all states almost equally attractive from the point of view of labour cost for investment as well as reduce distress migration,” added the Survey.