Minimum pay may raise upto 28% on government’s wage code

The national minimum floor wage in the country could go up by 28% from an existing non-binding guideline wage set in 2017 based on new criteria proposed by the Union government, which has made draft rules to operationalise the Code on Wages 2019, according to calculations by multiple experts.

The draft says that a central advisory board will fix a required national floor wage for the first time, which will be the basis for new, multiple minimum wages at the federal and state levels.

The Code on Wages 2019 provides for a statutory national floor wage rate, below which no minimum wages can be fixed by any state body or employer.

The draft will be finalised in about four months after public consultations and suggestions. While the criteria for the floor wage have been left to an advisory board, the draft lays down the guidelines for fixing minimum wages.

According to Prof KR Shyam Sundar of the Xavier Labour Relations Institute, Jamshedpur, the floor wage calculated by following the laid-out criteria should stand between Rs 200 and Rs 225 per day, a raise of 14% to 28% when compared with the existing highest minimum wage of Rs175 per day in some states. The draft rules provide for nine-hour working shifts.

To be sure, the 7th Pay Commission in 2015 prescribed a minimum wage of Rs18,000 per month for all central government employees. For a 26-day working month, this works out to Rs 692 a day.

“The 7th Pay Commission recommendation setting the minimum salary at Rs18,000 will be the notional basis for the criteria hiking the floor wage,” an official of the labour ministry said.

According to the criteria, actual minimum wages must take into account a net intake of “2,700 calories per day per consumption unit” and “66 metres cloth per year per family”, apart from house rent (10% of minimum wages), fuel, household electricity, spending on children’s education, medical needs, and recreation. Expenditure on emergencies will constitute 25% of the minimum wages.

The floor wage will take into account an equivalent of three adult consumption units, including food, clothing, housing and any other factors considered appropriate by the central government from time to time, the draft states. The floor will be revised every five years.

The national average minimum wage is Rs 4,628 a month. On October 18, the Supreme Court provisionally allowed the Delhi government to raise it to Rs14,842 a month, after the move was challenged by various employer bodies. Trade unions, however, appeared sceptical. “A fundamental problem is that the distinction between skilled and unskilled work is linked to industry-specific jobs. But even the Supreme Court has said that over time, unskilled workers acquire more skills than they started off with,” said Brijesh Upadhyay, general secretary of the Bharatiya Mazdoor Sangh.