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Govt move to impose floor-level wage fails to impress unions, economists

Sreelatha Menon  |  New Delhi 

State governments may have finally agreed to the Union Labour Ministry’s proposal to amend the to make the national floor level minimum wage, at present Rs 115, statutory across the country, but the development impressed neither economists nor workers’ leaders.

Trade unions call the government’s move a “mere propaganda stunt”, and said the floor level minimum wage was not acceptable as it was “too low”. Economists, on the other hand, questioned the logic of the Central government making a minimum wage rate mandatory for all states, as there are different, industry-wise minimum wages in states.

“It is (national floor level minimum wage) just an ad hoc rate foisted on the nation 12 years ago by the labour ministry and not in accordance with the norms worked out by the 15th Labour Conference of 1957, which asked for calculating a base wage that would accommodate the basic needs of a worker including food, housing, health and other social costs,” says D L Sachdeva, national secretary of the Left-affiliated (AITUC).

The labour ministry has been periodically revising the national floor level minimum wage annually based on the consumer price index. State labour ministers, who attended a conference called by the on Friday, agreed to the proposal to make the floor level statutory.

The Centre, which has been desperately pushing the proposal for the last three years, had taken it to the Cabinet in 2009, but after objections by some ministries, the matter was referred to the Committee of Secretaries. The committee suggested the issue be taken to the state governments for their consent. The state labour ministers’ conference was called to thrash out the issue.

That minimum wages in many states are much below the floor level of Rs 115 is what prompted the Centre to go for an amendment, according to officials.

For instance, Gujarat pays a minimum wage of Rs 100 for agricultural workers, but only Rs 55 to Rs 65 for incense sticks makers. The amendment would compel these segments to raise wages to Rs 115. Orissa has wages much below Rs 115 in most industries like automobile, explosives, metal industries, pharmaceuticals and power looms.

Former chief statistician Pronob Sen feels artificially jacking up minimum wages in states based on standards calculated at the Centre would not reflect local needs and would raise costs and prices locally.

According to Rituparna Chakrovarty, Indian Staffing Federation vice-president, imposing a rate on all states could be dangerous.

“If some states have higher rates, their units may go for the minimum rate prescribed by the Centre. Wherever the rates are found unfavourable, it may just push jobs into the unorganised sector. States should be given the option of calculating and fixing their wage taking into account cost of living, besides demand and supply,” she says.

AITUC’s Sachdeva says the the very concept of floor rate is vague as floor level is the lowest level. “You need a base rate,” he adds. “It is propaganda, not a reform. They started with Rs 60 about 12 years ago. It was ad hoc then. And now it has been revised yearly.”

AITUC and some other trade unions say the Rs 115 floor level is not acceptable. “We are for anything between Rs 10,000 and Rs 15,000 (monthly) as minimum wage for all,” says Sachdeva.

First Published: Sun, September 30 2012. 00:47 IST