The Centre has begun constituting a Central Advisory Board (CAB), which will hold consultations before recommending the national floor wage. Once notified, it will become the legally binding minimum threshold below which states and union territories (UTs) cannot fix their minimum wages.
The technical exercise is expected to build on estimates prepared by an expert group chaired by economist and statistician S P Mukherjee, which submitted its report to the labour ministry in 2021. The panel had recommended a methodology based on household consumption requirements and regional variations in the cost of living.
While its report is expected to form the basis of the current exercise, the consumption basket is likely to be updated to reflect the inflation since the panel submitted its recommendations, the people said.
“Parallelly, discussions are also ongoing with states, as one of the biggest challenges in fixing a national floor wage is the state-wise variation in minimum wages,” said a senior official aware of the matter.
An email sent to the labour ministry did not elicit a response until press time.
The Code on Wages mandates the Centre to constitute the CAB to advise it on matters relating to the fixation of minimum wages, including the national floor wage. The board will comprise representatives of employers, trade unions, independent members and five state government representatives nominated by the Centre. It is expected to have 15 members, the people said.
The government has so far not indicated a timeline for notifying the national floor wage.
The exercise marks the next step in implementing the Code on Wages, one of the four labour codes that came into force last year.
The law requires the Centre to fix a national floor wage after taking into account workers’ minimum living standards and other relevant factors.
Unlike the earlier National Floor Level Minimum Wage, a non-statutory benchmark last revised to ₹176 per day in 2017, the national floor wage under the Code will be legally binding, requiring states and union territories to ensure their minimum wages are not set below it.
The provision is expected to be one of the most closely watched aspects of the labour codes because of its implications for wage levels across states and sectors. While several states already prescribe minimum wages above the likely floor, those with lower wage rates may have to revise their notifications once it is notified.
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