Exclusive: Centre likely to come up with two minimum wage rates by April

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The Centre is likely to come up with two minimum wage rates – a minimum wage rate, and a mandatory minimum floor rate – by April, ending years of delay.

The move could be crucial for rolling out the wage code on labour, and putting in place a national mandatory floor for all employees, and sectors.

Led by veteran labour economist and statistician SP Mukherjee, a nine-member government panel working on the minimum wage has concluded nearly 10 meetings, and is expected to come up with a report by the end of March, at least two officials with knowledge of the development said.

The labour ministry has told the panel not to fiddle with the fundamentals of the minimum wage rules, and has asked them to only consider expenditure of three units – husband and wife one unit each, two children as a single unit – while calculating the expenditure and daily requirements, said one of the two people cited above.

The panel, however, is likely to come up with two sets of rates – a minimum wage for central sphere, and a mandatory floor rate for states to adopt.

“Though the committee had a life of three years from the time it was established, the work has progressed well and most likely the minimum wage report will be ready by end of March. There is a very decentralised way of functioning and the panel members with different expertise have been assigned focused areas,” said the second official, who also declined to be named.

“This is a better way to work and speeds up the work, and once the ground work is over, this can be taken up holistically by the committee. The Anoop Satpathy committee report (published in 2018-19) is a good piece of work, and is also been studied by the present committee,” the first official said.

“Once the report is out, it is expected to help implementation of the Wage Code on labour.”

Experts and academics have been demanding a national minimum wage for years and believe that it will benefit a sizable portion of the workforce. The variation of scheduled employments and minimum wage rates within and across states varies widely, necessitating a national mandatory floor rate.

The number of scheduled employments varies from three in Mizoram to 102 in Assam with the number of scheduled employments being in the high double digits in most states. Similarly, the notified lowest minimum wage rate (per day) varies from Rs 115 in Nagaland to Rs 538 in Delhi, official data shows.

The Economic Survey 2018-19, too, had advocated that India needs to have a mandatory national-level minimum wage to promote social justice and curb distress migration.

An effective minimum wage policy that targets the vulnerable bottom rung of wage earners would help drive up the aggregate demand and build and strengthen the middle class. It would spur a phase of sustainable and inclusive growth, the survey had suggested.

“We hope the report is out soon. Once the report is ready, it will speed up the process of rolling out the wage code. Else, the credibility of the committee, and that of the code will be questioned,” said KR Shyam Sundar, a labour economist and professor at XLRI Jamshedpur.

“There is a strong demand from employees’ associations that while calculating minimum wage, at least four or five units should be considered. Else, this won’t present the real consumption and requirement in a family. It’s a fact that a mandatory minimum wage will be beneficial,” Shyam Sundar said.

He, however, mentioned that employers’ groups have been lobbying that the minimum wage should not be increased significantly as it will drain their revenue in a stretched economic environment.

Calls and messages to the Union labour secretary did not yield a formal response till the time of filing this story.

In 2019, the labour ministry had set aside the Anoop Satpathy Committee report. The seven-member Satpathy panel had suggested a national minimum wage of Rs 375 per day and a monthly salary of Rs 9,750. The panel had suggested that a housing allowance of Rs 1,430 also be provided to city-based workers in addition to the monthly pay.

The labour ministry though did not even come out in public on why it is setting aside the Satpathy panel report, it is widely believed that Rs 375 as a national floor recommended by the panel did not garner the required support from the authorities.

Earlier in 2021, the ministry had set up a panel led by Ajit Mishra, then director of the Institute of Economic Growth in New Delhi. It was reconstituted after two members, including Mishra, resigned midway.