Increases in wage rates significantly higher than Inflation rate: PHD Chamber

Minimum wage for unskilled workforce has witnessed a significantly increasing trend as compared to increase in inflation rate (CPI Inflation) in majority of the states in India, said Dr. Mahesh Gupta, President, PHD Chamber of Commerce and Industry.

At the all India level, the minimum wage rate increase for unskilled workforce during the years 2013-14, 2014-15 and 2015-16 was at an average of 11.17%, while the average CPI Inflation rate was at 6.13% during the same period. Thereby the increase in wage rate was of 5.04 percentage points higher as compared to increase in CPI inflation.

The states of Kerala, Assam, Odisha and Maharashtra witnessed more than 20% higher increase in minimum wage rate for unskilled workforce as compared with CPI inflation.

In the state of Kerala the minimum wage rate increased from Rs. 85.20 per day in 2012-13 to Rs. 150 per day for the years 2013-14 and 2014-15 and further reaching to Rs. 275.46 per day for 2015-16, thus the average increase in wage rate for the three consecutive years was 53.23%. While the CPI inflation for the same period (2013-14, 2014-15 and 2015-16) was 9.01%, 5.98% and 3.84% with an average inflation rate of 6.28%. Thereby, the increase in wage rate was of 46.95 percentage points higher than the increase in CPI inflation.

Certain states like Tamil Nadu, Punjab, Karnataka, Uttar Pradesh, Jharkhand and Gujarat witnessed a moderate increase in wage rate, varying in the range of 10.77 to 18 percentage points as compared to CPI inflation.

The state of Tamil Nadu had minimum wages for unskilled workforce constant at Rs. 85 per day for the years 2012-13, 2013-14 and 2014-15 while for the 2015-16 the minimum wages increased to Rs. 146 per day, the average wage rate for the three years stands at 23.92%. The CPI inflation rate in the state was 6.40% in 2013-14, 6.15% in 2014-15 and 5.22% in 2015-16 and the average for the three years stands at 5.92%. Thus, the increase in wage rate was of 18 percentage points higher as compared to increase in CPI inflation.

On the other hand states like West Bengal, Chhattisgarh, Himachal Pradesh, Jammu and Kashmir, Madhya Pradesh, Bihar and Haryana witnessed a marginal increase in wage rate with a more or less consistent increase CPI inflation rate ranging from 1.1 to 8.98 percentage points.

The state of West Bengal had minimum wages fixed at Rs. 112.50 per day for 2012-13, Rs. 131.40 per day for 2013-14, Rs. 150.24 per day in 2014-15 and Rs. 171 per day in 2015-16. The average wage rate increase for the three years stands at 14.99%. The CPI inflation rate in the state for the same years was 10.10% in 2013-14, 2.75% in 2014-15 and 5.19% in 2015-16 and the average for the three years stands at 6.01%. Thus the increase in wage rate was of 8.98 percentage points higher than the increase in CPI inflation.

In the state of Delhi the wage rate for 2012-13 was Rs. 279 per day, further being constant at Rs. 311 per day for the years 2013-14 and 2014-15, while for 2015-16 the minimum wages increased to Rs. 316 per day. The average increase in wage rate stands at 4.36% for the three years. The CPI inflation rate in the state for the same years was 8.28% in 2013-14, 4.91% in 2014-15 and 4.09% in 2015-16 and the average CPI inflation for the three years was 5.76%. Thus, the increase in wage rate was of (-) 1.40 percentage points lesser than the increase in CPI inflation.

The state of Rajasthan had a wage rate of Rs. 147 per day in 2012-13 reaching to a constant rate of Rs. 166 per day for 2013-14, 2014-15 and 2015-16, the average wage rate increase for the three years was at 4.31%. The CPI inflation rate in the state for the same years was 7.92% in 2013-14, 6.85% in 2014-15 and 4.61% in 2015-16 and the average for the three years stands at 6.46%. Thus, the increase in wage rate was of (-) 2.15 percentage points lesser than the increase in CPI inflation.

With the advent of Make in India policy we suggest a calibrated approach to be followed in order to set the wage rates for the workforce and to create an efficient and conducive economic environment to expand production possibility frontiers and to generate employment opportunities.

We believe a greater synchronisation of the policy environment would go a long way to provide fruitful outcomes of various dynamic reforms announced by the Government during the recent years.

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