National floor wages: Govt sets up another panel, gives it 3 years

By: |
June 04, 2021 5:15 AM

The wage code also empowers the central government to fix national floor level minimum wages (NFLMW), below which no state can set their minimum wages.

The Code on Wages ‘universalises’ the provisions of minimum wages and timely payment of wages to all employees irrespective of the sector and wage ceiling.

Nearly two years after the passage of the Labour Code on Wages that gave legislative protection of minimum wages to all workers, the labour ministry has now constituted an expert committee and given it the mandate to fix the minimum wages for different regions.

It will also propose national floor wages for all categories of work, below which the minimum wages can’t go.

However, the panel has been given a tenure of three years, implying the implementation of the minimum wages for all workers of the country could be delayed.

Currently, the provisions of Minimum Wages Act applies to workers in scheduled employments including mining, plantations and services. The wage code is meant to ensure the “Right to Sustenance” for every worker and extend the legislative protection of minimum wage to 100% of the country’s workforce from 40% now.

Ahead of the passage of the wage code in August 2019, the labour ministry had set up a similar committee chaired by Anoop Satpathy. The Satpathy-led panel had suggested a national minimum wage at Rs 375 per day or Rs 9,750 per month. It also suggested a monthly housing allowance of Rs 1,430 for city-based workers.

The new six-member committee, headed by Institute of Economic Growth director Ajit Mishra, will look into the international best practices on wages and evolve a scientific criteria and methodology to arrive at the wage rates.

Other members of the committee include Tarika Chakraborty, professor, IIM Calcutta; Anushree Sinha, senior fellow, NCAER; Vibha Bhalla, joint secretary in the labour ministry and H Srinivas, director general, VVGNLI, and DPS Negi, senior labour & employment advisor of the labour ministry.

The Code on Wages ‘universalises’ the provisions of minimum wages and timely payment of wages to all employees irrespective of the sector and wage ceiling.

Responding to a debate in Lok Sabha on the wage code, labour minister Santosh Gangwar had said, “At present, many of the states have multiple minimum wages. The minimum wage would primarily be based on geography and skills. It will substantially reduce the number of minimum wages in the country from existing more than 2,000 rates of minimum wages.”

The wage code also empowers the central government to fix national floor level minimum wages (NFLMW), below which no state can set their minimum wages.

The concept of NFLMW was first mooted on the basis of the recommendation of the National Commission on Rural Labour (NCRL) in 1996.

NFLMW was fixed at Rs 35 per day in 1996 and has since been revised almost regularly every two years taking into account the increase in the Consumer Price Index number for industrial workers, CPI (IW). NFLMW now stands at Rs 178 a day fixed in 2019.

Barring a couple of states, most of the states keep minimum wages for many ‘scheduled employments’ lower than the NFLMW. There are also wide disparities between the minimum wages actually enforced among states and across sectors, a situation that could partly be explained by the differences in income levels and the prices among states.

The Economic Survey 2018-19 stated that an effective minimum wage policy that targets the vulnerable bottom rung of wage earners can help in driving up aggregate demand and building and strengthening the middle class, and thus, spur a phase of sustainable and inclusive growth.

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