The Centre plans to fix minimum national monthly wages at around Rs 15,000 for all jobs in both the formal and informal sectors in the country.
The National Minimum Wages Act, 1948, lays down minimum wages for 45 listed economic activities, which also serve as minimum wages for these activities in the states. However, states can specify minimum wages for over 1,600 economic activities.
Raising floor wages to Rs 15,000 will effectively more than double the income of workers in activities covered by the Minimum Wages Act. The union labour ministry is likely to call a meeting soon to get the states on board for the change in the law. An inter-ministerial group is already working on the details with the states.
The proposed higher wages are in sync with the relaxed regulatory regime for employers that the government intends to bring, Arun Kumar Sinha, additional secretary (labour), said.
“The amendment to the Minimum Wages Act will include a provision that would make the national rates binding on the states, rather than being merely advisory, as is the case now,” Sinha told The Sunday Express.
Government officials said the higher but flat floor of minimum wages will have a national footprint like the GST. It will go down well with workers especially in the informal sector, reduce labour unrest, and make it easier for industry to open in new areas without having to negotiate through a forest of wage rates.
Labour sector specialists, however, said the move would likely be rendered “ineffective” due to implementation difficulties. Manish Sabharwal of Teamlease Services said, “Unlike in the US for instance, where a hike in minimum wages immediately translates into a raise for every worker, the benefits here are practically impossible to monitor because of the huge unorganised sector.”
Santosh Mehrotra, a former director-general of the Institute of Applied Manpower Research, said, “Such a rise never works. Implementation is a big issue. A far better option would be to intervene through social security measures like insurance cover, where the slippages can be tracked.”
The Centre hopes that revising the wage rate will build support for the government as it cuts expenditure on social sector programmes that eat away 17 per cent of the annual investment budget, but fail to deliver commensurate benefits.
The Narendra Modi government has already steered two labour bills through Parliament and a third — easier rules to shut units that employ fewer than 40 workers — is pending in Rajya Sabha.
Government officials said the unique labour identification number to be allotted to units to facilitate online registration and simplified single online returns will now make it difficult for even smaller employers to avoid paying minimum wages.
The revisions will also be in sync with the government’s revised poverty threshold estimate. As a result of these reforms, the government does not see the need to increase the number of labour inspectors at either the central or the state level. There are about 1,800 labour inspectors at the centre currently.
Minimum daily wages vary widely from state to state now. In Haryana, wages for the highest skilled workers are Rs 241.90, while in Bihar, which supplies the largets number of migrant workers in the country, daily wages range from Rs 288 for workers in engineering workshops to Rs 205 for clerical workers.
In Nagaland the best daily rate is only Rs 110. In Tamil Nadu, laundry workers and those in dangerous occupations like toddy-tapping get Rs 346.20, but most others draw less than Rs 300.