The Centre is looking at deferring the mandatory minimum wage hike for this year, in view of the COVID-19 crisis that has affected the economy greatly. This move is purported to culminate in an annual saving of Rs 7,500 crore for both the private sector and central and state governments.
Government estimates suggest that the Minimum Wage Act covers nearly 30 percent of India’s workforce, which means the proposal to postpone minimum wage hikes could affect the lives and livelihood of more than 15 crore workers.
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A government official privy to the development has informed that policy makers are still evaluating the proposal, but a decision is likely soon, reported the Economic Times.
The announcement would come at a time when most of the country’s daily wagers are already reeling under wage losses due to the months-long nationwide lockdown to contain the spread of the deadly novel coronavirus.
The Centre revises the minimum wage for workers twice a year – once in April and once in September. The cost of living allowance constituent in the minimum wages is revised on the basis of the consumer price index-agricultural labour (CPI-AL). Usually, the amount increases by four to five percent annually.
The statutory rate is Rs 178 per day at present, but it varies across different states, skills, sectors, etc., and ranges between Rs 180 and Rs 430 per day. The revision cycle of minimum wages is also different in different states.
It was supposed to get revised in April this year, but got delayed due to the outbreak and now the government wants to defer it for the whole year.
Some government officials have flagged concerns that it might be regarded as an anti-worker move, while others have upheld how it will help shield jobs. The Centre is treading cautiously right now, given the multiple protests that have been staged by various labour unions over the past weeks after labour laws were suspended in a few states.
However, the industries have been urging against any wage hike to mitigate the losses incurred due to the COVID-19 crisis. They have touted it as a non-cash subsidy that would provide some relief to employers without having the government to spend a penny.
Lohit Bhatia, President, Indian Staffing Federation, has said: “This is a unique year in which two months of lockdown has meant that there will only be 10 months of output or productivity. Hence, employers want the government to defer the mandatory hike for a year as it would give them some respite.”
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