Polls ahead, Govt works to fix pensions and floor wages in informal sector

“The proposal was to come up on December 26 but was deferred following a last-minute review by Prime Minister Narendra Modi. It may now come up for approval on January 2,” the sources said. “Earlier, there was a major rush from the Prime Minister’s Office to ensure that the Bill be introduced in the current session of Parliament.”

The Code, which was first introduced in Parliament in August 2017, proposed that minimum wages be made a legal right for all workers. Its quantum was to be decided by a Committee, and once announced, “No state [could] declare a wage lower than the National Minimum Wage”.

The Bill, which was intended to replace four existing laws on wages, bonuses and remuneration, was referred to the Standing Committee, which submitted its report earlier this month. The revised proposed Code seeks to allow unions in the unorganised labour force, fix daily working hours in the informal sector, ensure that the employers pay workers’ wages by the seventh day of every month, and assign a mandatory day off every week.

The revised Code also proposes to institute a labour inspector to inspect working conditions and ascertain that workers are being paid the National Minimum Wage. There is a provision for employees to complain to the labour inspector if any conditions of their employment are not met, the sources said.

At present, these benefits and rights are available only to the 6 crore workers in the organised sector. For these workers, the government is currently trying to find the money for a threefold increase in pensions. “The proposed Code on Social Security & Welfare would be finalised once the finance minister agrees on the quantum of budgetary support that he can provide for the pension,” the sources said.

“At present, the minimum pension support of Rs 1,000 per month is guaranteed to 17.64 lakh workers. This requires a budgetary support of Rs 800 crore. An increase to Rs 2,000 would require Rs 4,300 crore, and a further increase to Rs 3,000 would require Rs 10,000 crore.

“But this requires approval from the Group of Ministers (GoM) headed by Finance Minister Arun Jaitley. There is no word on the timing of the meeting, but it could be on Wednesday,” they said.

The sources said the GoM could also consider providing a minimum pension support of Rs 1,000 per month to workers in the unorganised sector. This will entail a budgetary outgo of Rs 12,000 crore in the first year, which will subsequently climb higher.

“The proposal is that there would be a lock-in of 20 years of service for any pension withdrawal under this scheme compared to a 10-year lock-in for the organised sector,” the sources said.

“Another variant, as suggested by the Joint Secretary in-charge, was to provide them (the unorganised sector) the benefits of the Employees’ Provident Fund Organisation as well as Employees’ State Insurance Corporation. In that case, the numbers would be bigger, and would require a new set up,” they said.

The Narendra Modi government had embarked on a major labour reform initiative soon after taking charge in May 2014. The employee-friendly labour codes currently on the table will have to be approved by the Cabinet and introduced in Parliament before elections are announced, perhaps in March.