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Centre plans to make national minimum wage mandatory

Centre plans to make national minimum wage mandatory
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First Published: Mon, Apr 05 2010. 01 15 AM IST
Updated: Mon, Apr 05 2010. 09 30 AM IST
New Delhi: To protect incomes of workers, the Union government plans to amend a law to make the national minimum wage mandatory across the country.
At present, the labour ministry just recommends to states a minimum floor wage rate as a benchmark. In November, the floor rate was raised to Rs100 a day from Rs80. However, many states are yet to implement the hike as compliance isn’t compulsory, said a ministry official.
“At the most, right now the Centre can make persuasive requests to states,” said the official, declining to be identified. “The new amendments can bring change by helping the poorest to earn the minimum ensured income.”
In a series of several planned amendments to the Minimum Wages Act, 1948, the ministry proposes to empower the central labour commissioner to revise the national minimum wage every six months on the basis of changes in the Consumer Price Index for industrial workers to protect them against inflation.
The amendments are being proposed amid growing concerns regarding minimum wages and poor enforcement of rules that deny workers their minimum due. Besides violating minimum wage norms, firms often do not maintain payment registers and avoid distributing salary slips in contravention of the law, said the labour ministry official cited above. The suggested penalty for such infringements has been raised from the current Rs500 to Rs5,000-10,000.
A panel of secretaries last month decided to conduct a nationwide survey to assess the impact of a statutory national wage on the economy, said labour secretary Prabhat Chaturvedi.
“Raising the national floor wage level is under consideration,” he said. “The committee of secretaries will take a final view on the matter.”
Experts say a national minimum wage will bring about transparency as a large section of workers who are unaware of such norms will understand the system. “There is a strong rationale for it. But a detailed exercise must be carried out to arrive at what should be the wage rate as the cost of living differs in urban and rural areas,” said Ravi S. Srivastava, economics professor at Jawaharlal Nehru University.
For unskilled workers, the Mahatma Gandhi National Rural Employment Guarantee Scheme offers rural households access to 100 days of manual work a year at Rs80-100 a day. Some say this scheme has pushed up wages and created a credible floor wage for other sectors more efficiently than any law could.
“The concept of a national nominal wage is not particularly sensible,” said Partha Mukhopadhyay, an economist at the New Delhi-based Centre of Policy Research. “On the other hand, the national rural employment guarantee scheme has been far more effective in raising wages compared with minimum wage legislations that have been around for a long time.”
maitreyee.h@livemint.com
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First Published: Mon, Apr 05 2010. 01 15 AM IST