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The Union Cabinet Wednesday cleared the new version of Code on Wages Bill, which seeks to define the norms for fixing minimum wages that will be applicable to workers of organised and unorganised sectors, except government employees and MNREGA workers.
What are the determining factors?
As per the Bill, minimum wages will be linked only to factors such as skills and geographical regions. At present, minimum wages are fixed on the basis of categories such as skilled, unskilled, semi-skilled, high skilled, geographical regions, and nature of work such as mining and are applicable for 45 scheduled employments in the central sphere and 1709 scheduled employments in states.
As per the Cabinet approved Bill, the minimum wages across the country would be only linked to factors of skills and geographical regions, while the rest of the factors have been removed. The 2017 Bill had proposed to link minimum wages to factors such as the skills required, the arduousness of the work assigned, the geographical location of the workplace.
This is expected to effectively reduce the number of minimum wage rates across the country to 300 from about 2,500 minimum wage rates at present.
Why was approval from Cabinet needed?
This approval from the Cabinet was required since the previous version, Code on Wages Bill, 2017, which was introduced in Lok Sabha in August 2017 by the previous NDA government and was later referred to the Standing Committee, lapsed after the 16th Lok Sabha dissolved in May.
The Code on Wages will amalgamate the Payment of Wages Act, 1936, the Minimum Wages Act, 1948, the Payment of Bonus Act, 1965, and the Equal Remuneration Act, 1976.
Floor Wage
A National Floor Level Minimum Wage will be set by the Centre to be revised every five years, while states will fix minimum wages for their regions, which cannot be lower than the floor wage. The current floor wage, which was fixed in 2017, is at Rs 176 a day, but some states have minimum wages lower than it such as Andhra Pradesh (Rs 69) and Telangana (Rs 69).
Other labour codes
The first term of the NDA government had proposed codification of labour laws into four codes. The labour and employment ministry had drafted four labour codes: industrial relations, wages, social security and welfare, and occupational safety, health and working conditions by amalgamating, simplifying and rationalising the relevant provisions of the existing central labour laws. The Code on Occupational Safety, Health and Working Conditions is also expected to be shortly listed for approval by the Union Cabinet.
