Minimum wage for workers may rise by up to five times in 10 states

The government last year set up an expert committee to determine a new methodology for minimum wage

The biggest benefit from a hike in the minimum wage, as proposed by a government-appointed expert panel recently, would go to workers in at least 10
states.

Workers from Andhra Pradesh, Telangana, Gujarat, Himachal Pradesh, Maharashtra, Tamil Nadu, Nagaland, Arunachal Pradesh, Tripura and Meghalaya may see their income levels rise by two to five times. In other words, these states had a significantly lower level of minimum wage than what was established by the panel, based on data evidence.

For instance, in Andhra Pradesh and Telangana, the minimum wage level for an unskilled worker stood at Rs 69 a day (or Rs 1,794 a month) as on November 1. According to the proposal, the minimum wage can go up to Rs 380/day (or 9,880/month) in these states.

The government last year set up an expert committee led by V V Giri National Labour Institute (VVGNLI) fellow Anoop Satpathy to determine a new methodology for minimum wage. The report was made public on Monday.

The panel suggested the national-level minimum wage in the country should be Rs 9,750 a month (Rs 375/ day). Alternatively, it proposed a national minimum wage at various regional levels, depending upon local conditions, in the range of Rs 8,892 to Rs 11,622/month (or Rs 342-447/day), and suggested an additional house rent allowance for urban workers.
 

Only Delhi had a higher minimum wage (Rs 538/day) than the proposed level (of Rs 447/day). The difference in the minimum wage set in all states and the proposed one was in the range of 20-450 per cent. The difference was the least in Madhya Pradesh (20 per cent).

The proposed minimum wage levels seek to address the pay parity prevalent across the states. “Despite the statutory fixation of wages under the Minimum Wages Act, 1948, low wages and wide disparities in minimum wages for various scheduled employments have continued to prevail across states,” the committee report noted. It found no systematic procedure to revise minimum wages in states, and said that “everything is contingent upon the state’s institutional capacity or the minimum wage-fixing machinery”.

The monthly minimum wage difference between the states with lowest level and those with the highest level thresholds is at Rs 12,194 at present. If the proposed system is put in place, this difference would stand at Rs 2,730.

In India, real minimum wages declined in some scheduled employments, such as brick kilns and oil mills, even in Kerala which is well known for higher minimum wages. The minimum income levels also fell for agriculture and constructions sectors in Maharashtra during 2008-13, according to the International Labour Organisation’s India Wage Report 2018.

However, some experts feel the minimum wage framework should be simplistic, instead of a region-wise income threshold. “A less complex minimum wage system is easier to implement. There should be one national-level minimum wage which should be either a floor or a median minimum wage. It should be revised every two-three years,” said K R Shyam Sundar, professor of human resources management at Xavier School of Management.

He added that each state should have a single wage rate as grouping them in regions may lead to rich and poor states being put in one category.

While countries such as Brazil, Russia and South Africa have fixed a simple national minimum wage for the whole country, China, Vietnam and Malaysia have selected different minimum wages with respect to regions, sectors or occupational categories of workers, according to the committee report.

The Minimum Wages Act, 1948 empowers the states to set a wide variety of minimum wages and to revise them regularly at appropriate intervals - not exceeding five years using the same method as for fixing minimum wages. The rate is based on daily spending estimates for a working class family on 2,700 calories of food per person, 72 yards of clothes, minimum housing rent and education, and light and fuel, as prescribed by the Indian Labour Conference in 1957. The rate varies according to skills, areas, occupations or employment.

However, in India, the minimum wage legislation applies only to certain categories of scheduled employments, which are set by either by the Central Government, states or Union Territories.