Home / Politics / Policy /  Lok Sabha pushes ahead with labour reforms, passes wage code bill

NEW DELHI : Pushing ahead with labour reforms, the Lok Sabha on Tuesday passed the wage code bill in the face of concerns over a single minimum wage and gender disparities in pay.

The bill seeks to merge four labour laws related to wages, two of them dating back to 1936 and 1948. It aims to make provision for a national mandatory minimum wage but does not announce one. It makes provision for application of minimum wages for both informal and formal sector workers. It also aims to rationalize the number of wage types from around 2,000 categories to around 200 and reduce the influence of inspectors on companies, a constant demand from employers for years.

Opening the discussion in the Lok Sabha, labour and employment minister Santosh Gangwar called the bill historic, saying it aims to transform old and obsolete labour laws into more accountable and transparent ones.

Gangwar said the bill seeks to universalize the payment of minimum wage and timely payment of wages. “Those who were out of the ambit of minimum wages will get legislative protection of minimum wages after the bill becomes an Act," he said.

Suresh Kodikunnil, a Congress parliamentarian and former junior labour minister said there is no need to codify the labour laws and that the government is only doing it to benefit employers. He said the bill was brought in without enough deliberations and does not make provision for higher income for workers keeping in mind their need and consumption pattern. He said the bill stays away from prescribing a respectable national minimum wage in sync with 7th Pay Commission-fixed minimum wage of 18,000 for government employees.

An internal committee of the labour ministry had suggested a national minimum wage of 375 per day based on July 2018 price plus a housing allowance for city-based workers. It had also suggested an alternative region-wise minimum wage ranging from 342 to 447 per day.

However, Gangwar on Tuesday said a tripartite committee will decide on the minimum wage without explaining why the bill fails to prescribe a minimum wage.

K.R. Shyam Sundar, a labour economist and professor at XLRI Jamshedpur said the bill has four key pain points. “The draft wage code of 2017 had talked about minimum wage but in 2019 it talks about a national floor level. The difference is: floor level means the lowest of the low wage without taking into account the requirement or consumption pattern. This floor level should go," he said.

Sundar said the bill fails to put in place a model to fix minimum wages taking into account suggestions of the Indian Labour Conference of 1957, a court order on 1992 and committee recommendation in 2019.

The bill also does not make it explicit on how it aims to reduce gender discrimination in salary payments and reduces the monitoring mechanism of those who violate the rules.

However, the provision for a minimum wage for all workers—formal and informal—itself is net positive. Besides, it removes the 24,000 threshold under the Payment of Wages Act thus making all employees part of the code. Also, the bill extends the time period for settlement of wage disputes to three years, up from six months to two years earlier.

The Economic Survey presented in Parliament on 4 July has said that a well-designed minimum wage system “can be a potent tool for protecting workers and alleviating poverty, if set at an appropriate level that ensures compliance".

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