The CPI is of course not regional, neither is at state-wise. It takes into account some categories of workers, but those categories are not relevant for fixing minimum wages. So, the panel can’t be helped by CPI numbers
The government has recently re-constituted expert group on statutory minimum wages under statistician SP Mukherjee. The 9-member panel’s mandate is to make recommendations on minimum wages and national floor wages as mandated in the Code on Wages passed by Parliament in 2019. In an interview with Surya Sarathi Ray, Mukherjee talks about the criteria likely to be followed in determining minimum wages. Excerpts:
The wage code gives legislative backing to the minimum wages for each and every worker in the country. What are the criteria to be followed to determine the wage thresholds for different categories of work?
We have thought of three criteria. First, we have to see how an increment in the minimum wage could impact the industry. This is because if it is raised steeply, then not just the employer will suffer but the employee may also end up losing her job.
Secondly, we have to see the impact of the rise in wages on industrial disputes and resolutions. This is keeping in view the bigger industrial units. Any exceptional wage rise may lead to a growing number of industrial disputes.
Thirdly, we have to see how an increase could impact the level of living of a worker’s household.
If these three major criteria are quantitatively analysed, then I think we will be able to defend our recommendations strongly.
The wage code prescribes minimum wage based primarily on geography and skills. Do you support the idea?
We have a wage rate index and a consumer price index. The CPI is of course not regional, neither is at state-wise. It takes into account some categories of workers, but those categories are not relevant for fixing minimum wages. So, the panel can’t be helped by CPI numbers. It can’t be helped by the wage rate index as well. Wage rate index can help us in consultations, but not in fixing minimum wages or floor wages.
The minimum wage is meant more for the unorganised sector workers. Some well-informed representations from the small-scale industries can also help us. Minimum wage is to be fixed in a way that it raises the level of the living of the worker’s household. We generally see two categories of households – one in which there is only one wage earner and on the other, there are multiple wage earners. The level of living in a household depends on the total income. Therefore, we need to consult many official documents which are available and throw light on these aspects. That will take time.
Data collection will be a daunting task…
We will go by the National Sample Survey Office (NSSO)’s socio economic survey on consumption expenditure. If they can’t provide me with that data, then we will have to conduct a small study, something we call a ‘type’ study, to get the household economy of one wage earner and the number of members who are needed to be supported by that earning member. From here, the panel will get an idea as to how any increment in the existing minimum wage could contribute to one family, to ensure a certain level of life standard.
Now, the consumption pattern has also changed a lot over the years, what should be the ideal ratio between food and non-food items of consumption in the minimum wage?
We will go by the existing data of NSSO, because NSSO, over the years, has devoted itself to get an idea about consumption expenditure. Even in other surveys, not devoted to socio-economic surveys like this, NSSO usually keeps one set of questions regarding the monthly consumption expenditure. That is item-wise. We will also look at the NSSO figure that gives the percentage of average monthly consumption expenditure on food and non-food items.
My idea is that any increment on existing minimum wage should also be examined from the industry point of view. Suppose we recommend a 50% hike in the minimum wage, what will be the likely impact of it on the industry, particularly on the small, unorgnaised sector. That will come from structured discussion with these employers and their associations. So that will take some time. If everything goes smoothly, it will take at least one year for the committee to finalise and submit its recommendations.