The non-binding National Floor Level Minimum Wage (NFLMW) has remained unchanged since 2017, a situation that could worsen the income crisis among vast sections of population, mainly daily-wage workers.
Proper and timely revision of NFLMW by the Centre, typically conducted once every two years and factoring in the rise in the consumer price index for industrial workers (CPI-IW), would have enabled millions of workers in sectors like plantations and services to benefit from the economy’s buoyancy and escape poverty, provided states has followed the norm.
Since it has only persuasive value, the Centre can only request the states and union territories to fix and revise the minimum wages for all scheduled employments in their respective domains, ensuring they are not below the NFLMW.
“The NDA government has taken credit for having passed the Wage Code in August 2019. In fact, none of the four labour codes has been implemented. Minimum wage is the bare minimum a worker should get. If it is not revised periodically, labour welfare will be seriously affected. It is time for the NDA government to implement the Wage Code and establish a statutory national floor-level minimum wage, which will benefit millions of workers,” said labour economist K R Shyam Sundar.
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.
Currently, the minimum wage for an unskilled worker in Delhi stands at Es 710 per day, whereas the same in Bihar is Rs 428. In many states, like Kerala and Tamil Nadu, the actual wages are generally higher than the notified minimum.
The Wage Code, passed in Parliament and notified but not yet implemented, seeks to universalise the provisions of minimum wage across employment in organised and unorganised sectors. It mandates the Central Government to fix the floor wage, and that the minimum wage rates set by the state and Union Territories shall not be less than the floor wage.
As per the extant provisions, NFLMW lacks statutory backing. The timely revision is done to establish a uniform wage structure and reduce disparities in minimum wages across the country. In June 2017, NFLMW was hiked by 10% and in July 2015, by 17% to Rs 160.
Ensuring minimum wages for the vast segment of informal economy workers was a priority of the government since Independence. The Minimum Wages Act 1948 was enacted to achieve that goal. On the recommendation of the National Commission on Rural Labour, the then government introduced the concept of NFLMW to address disparities in minimum wages within and across states in various scheduled employments.
NFLMW was first fixed at Rs 35 per day in 1996 and has since been revised almost regularly every two years. NFLMW was raised to Rs 137 in July 2013 from Rs 115 a day fixed in 2011.
“The concept of NFLMW is to be made statutory through the Code on Wages, which has remained non-statutory to date because the code has not yet come into force, as the rules for the code have not yet been notified. Nonetheless, the NFLMW could have been raised upwards after 2017 to meet the rising cost of living, which has taken place since 2017,” said Partha Pratim Mitra, former principal labour economic advisor, Union ministry of labour
In 2017, to enhance the effectiveness of the wage policy, the present dispensation introduced the Code on Wages in Parliament, which subsumes four Acts, including the Mining Wage Act 1948, and recommends the introduction of a binding National Minimum Wage.
“Even if the NFLMW is followed, the wages would remain woefully low. There is a need to pay a genuine living wage to workers,” said Atul Gupta, partner at Trilegal.
Before the passage of the Wage Code, the Centre had in 2018 constituted a committee, headed by Anoop Sathpathy, to develop a methodology for the fixation of national minimum wages. Considering one wage earner per household for 3.6 consumption units and taking 2,400 calories of a balanced diet and related non-food expenditure, the committee recommended that the single value of the NMW for India should be set at Rs 375 per day as of July 2018. This would be equivalent to Rs 9,750 per month, irrespective of sectors, skills, occupations and rural-urban locations.