Economy

Minimum wage system needs to be revamped

T V Jayan New Delhi | Updated on July 04, 2019

Wages should be fixed under four categories — unskilled, semi-skilled, skilled and highly skilled

Keeping an inclusive growth in mind, the government may revamp the complex minimum wage system that currently exists in the country, if the Economic Survey is any indication.

The Survey called for redesigning minimum wage system so that it can serve as a tool to protect workers and alleviate poverty.

As of now, there are nearly 429 scheduled employments and 1,915 scheduled job categories for unskilled workers in India.

Despite its complex structure and proliferation, the prescribed minimum wages do not cover all wage workers.

“One in every three wage workers in India has fallen through the crack and is not protected by the minimum wage law,” the survey admitted.

 

Inclusive growth

It said that an effective minimum wage policy that targets the vulnerable bottom rung of wage earners can help in driving up aggregate demand and strengthening the middle class, and thus spur a phase of sustainable and inclusive growth.

The proposed code on wages bill can amalgamate all wage-related acts such as the Minimum Wages Act, 1948, the Payment of Wages Act, 1936, the Payment of Bonus Act, 1965 and the Equal Remuneration Act, 1976 into a single piece of legislation, the Survey suggested.

The definition of wage in the new legislation can subsume 12 different definitions of wages currently present in different Labour Acts. Apart from simplifying and rationalising the minimum wages, it would be a mechanism to adjust minimum wages regularly.

It should cover all employments, or workers in both organised and unorganised sectors. The minimum wages should be fixed for four different categories such as unskilled, semi-skilled, skilled and highly skilled.

The survey called for the Central government notifying a ‘national floor minimum wage’ that can vary broadly across five geographical regions.

The States can utilise this so that there is uniformity in minimum wages across the country.

Distress migration

Apart from giving a better livelihood option to unskilled workers, it may also help reduce distress migration.

At present, the minimum wages vary from around ₹115 a day in Nagaland to ₹1,192 a day in Kerala.

The survey suggested creation of a national level dashboard at the Centre which can be accessed by the State governments to regularly update the notifications regarding minimum wages.

This portal must be made available at Common Service Centres and rural haats for the workers to be aware of their rights.

While India’s Minimum Wages Act does not discriminate between women and men, an analysis of minimum wages for different occupations shows persistence of systematic bias.

For instance, women dominate in the category of domestic workers while men dominate in the category of security guards.

While both these occupations fall within the category of unskilled workers, the minimum wage rate for domestic workers within a state is consistently lower than that for security guards.

Published on July 04, 2019

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