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Labour ministry forms panel to look afresh at minimum wage fixation formula

Minimum wages differ from state to state, for example, in Delhi, the state government has recently decided to hike the minimum wages for unskilled worker to Rs 13,350 per month against Rs 9,724 per month earlier.

business Updated: Aug 03, 2017 22:02 IST
Press Trust of India
Press Trust of India
Press Trust of India, New Delhi
Minimum wage,skilled labour,unskilled worker
The Central Advisory Board under the Minimum Wages Act held a meeting chaired by Labour minister Bandaru Dattatreya in New Delhi on August 3.(PIB File Photo)

The labour ministry on Thursday formed a committee that will look afresh at the minimum wage fixation formula keeping in view the cost to maintain a minimum living standard and also the size of an average family.

The Central Advisory Board under the Minimum Wages Act on held a meeting in New Delhi, chaired by Labour minister Bandaru Dattatreya.

The board comprises central government nominated persons representing employers and employees, industry stakeholders and trade unions.

After the meeting, Dattatreya said, “Taking into all the consideration, we have decided to constitute the committee that will look into minimum wage fixation. The employers have no objection to this as there is a need for a minimum living standard in present day.”

“The Central Advisory Board which advises on policy direction on minimum wages had not met for about 7 years. In today’s meeting, we discussed about implementation of minimum wages in various states, areas needing more refinement and how minimum wage calculation can be rationalised,” Labour secretary M Sathiyavathy briefed after the meeting.

There are several states that have not even constituted their respective state advisory boards to fix minimum wages, she said.

Minimum wages differ from state to state, for example, in Delhi, the state government has recently decided to hike the minimum wages for unskilled worker to Rs 13,350 per month against Rs 9,724 per month earlier.

For semi-skilled and skilled persons, it has been increased from Rs 10,764 to Rs 14,698 and from Rs 11,830 to Rs 16,182 per month, respectively.

The labour secretary said the Centre can only advise states on fixing minimum wages while the onus of decision making lies entirely on their advisory boards.

“At the moment, there is no mandatory minimum wage that we can give. Some of the states have fixed minimum wages that are less than what we have advised. We can only have a advisory floor level minimum wage fixation but some of the states are even giving less than that,” she added.

The three-unit based formula to fix minimum wages presently counts only four members of a family -- husband, wife and two children. It has no provision to count dependent parents, if any, or even if there are more than two children.

The three-unit formula gives the husband a full unit, wife 0.8 unit, and 0.6 units for each of the two children.

Based on the three-unit formula, the minimum wage is worked out taking into consideration the calorific value requirements of 2,700 each, certain length of cloth requirement, housing rental value, education and medical expenses etc.

“Now the trade unions are saying that the three-unit system are not sufficient to decide minimum wages because the children continue to stay with the family for longer periods. The trade unions are saying that the two children and wife should be accorded one single unit,” Sathiyavathy said.

After the 2010 Supreme Court ruling that dependent parents are to be taken care of by children, two more units should be added and the formula be based on six-unit formulae than three.

“So that is something we need to explore,” she added.

However, from the employers point of view, she said it should not be abnormally high for them because it needs to be at a level which sustains the establishment.

Among others, there are issues related to dearness allowances (DA) fixation, as it is revised once in five years.

“Some of the states have not revised DA for more than five years. Every year or every six months, depending upon the variable DA, which is linked to the consumer price index, the variable DA has to be changed so that the minimum wage get altered,” the top ranking labour official said further.

The ruling-Bharatiya Janata Party -- affiliate trade union Bharatiya Mazdoor Sangh (BMS) -- said the three-unit formula to fix minimum wages is unscientific in today’s time as the situation that existed in 1957 has substantially changed as on today.

“The CrPC section 125 and Maintenance of Parents and Senior Citizens Act make it mandatory for an earning member to maintain his parents, failing which he/she may have to face penal consequences. Today, the average life span of a person has increased to 65 years compared to that of 1957. Hence two additional units have to be added,” the BMS Zonal Organising Secretary Pawan Kumar said.

Also, marriageable age of a child has also increased and they should also be given full units. So there is a need to hike number of units from three to six to calculate minimum wages, he added.

BMS has also demanded to form a monitoring committee with a trade union representative as its chairman to monitor poor implementation of minimum wages Act, both at the Centre and states.

First Published: Aug 03, 2017 22:01 IST