No single minimum wage floor under the Wage Code bill

New Delhi: India will not have a single mandatory minimum wage floor as talked earlier as the the union Labour ministry has stayed away from making it part of the wage code bill.

Instead it has left this important provision open ended making room for multiple minimum wage structure at different geographical zones.

The labour ministry's decision comes following criticism that its national floor is less than half of what was suggested by an internal committee.

The bill, which was tabled in the Parliament earlier this week, has assign the task to a tripartite body consisting of the government (both at the central and state level), industry and workers groups, at least two government official said, requesting anonymity.

“Minimum wage is a contentious issue for both industries and workers’ groups. Instead of keeping one number as the national mandatory floor, it will be well rehearsed at the state or region level,” said the first official cited above.

An internal panel of the Union labour ministry said in its report in January that “the single value of the national minimum wage for India should be set at ₹375 per day as of July 2018”. In addition to the minimum monthly wage of ₹9,750, the seven-member panel had also suggested that a housing allowance of ₹1,430 should be provided for city-based workers. Mint had reviewed a copy of the report.

However, after the Union cabinet approved the Wage Code bill, the labour ministry indicated that states will not be allowed to pay less than the minimum national wage of ₹178. Currently, the national minimum wage of ₹176 is not binding on any state. Increasing this number by just two rupees to ₹178 and making it a mandatory floor was seen as a huge devaluation of the idea of a national mandatory wage floor.

“The initial number considered for the minimum wage was ₹178. The fact that it was less than half of the suggested number prompted further deliberation. The economic survey had spoken about a decent wage and how it could better condition of workers and reduce poverty. Keeping all the facts in mind, it was decided to stay away from mentioning a single figure in the bill,” the second official said.

The economic survey had mentioned that a national mandatory minimum wage is a requirement and, if the government wishes, it can create five wage zones and have five different national minimum wage.

The decision to leave the subject open-ended in the bill hints at a possible willingness of the government to explore more than one mandatory floor, the second official said, adding that ₹178 will not serve the purpose, as the current minimum wage across India, barring five states, are over this threshold.

Workers unions believe that the wage code bill provides the government a good opportunity to facilitate a decent pay to the workers. If the government can pay a higher wage under the Mahatma Gandhi National Rural Employment Guarantee Scheme, why can it not have a decent figure as the national wage, as was advocated by the labour ministry committee. "I think one national wage is a better idea than five wage zones, said KR Shyam Sundar, a labour economist.

The bill is being routed as a key labour reform that will merge four labour laws related to wages and simplify wage definition and payments to workers. Currently, there are around 2000 categories of minimum wages in India. For example, Tamil Nadu has 76 category of minimum wages, ranging from ₹132 to ₹419.