India’s plan to put in place a mandatory national minimum wage, as envisaged in the labour codes, is unlikely to be realised anytime this year.
The government on Thursday announced a six-member committee, comprising economists and bureaucrats, to recommend the minimum wage floor, but gave it three years tenure without any clarity when they will submit the recommendations, which indicates that a national mandatory floor rate may not come into force in 2021.
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The labour code on wages passed by the Parliament in August 2019 has a provision to declare a ‘mandatory national wage floor’, or minimum wage, which states will have to comply with once the Wage Code, already passed by Parliament in 2019, is implemented.
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The committee will submit its recommendations “on minimum wages and national floor wages’ to arrive at wage rates, and it “will look into international best practices on wages and evolve a scientific criteria and methodology for fixation of wage”, the ministry said in a statement.
“The ministry of labour and employment has issued an order and has constituted the expert group to provide technical inputs and recommendations on fixation of minimum wages and national floor minimum wages. The Group has been constituted for a period of three years from the date of notification,” it added.
This is the second committee, which has been formed by the labour ministry, after setting aside the Anoop Satpathy Committee report in 2019. The seven-member Satpathy panel had suggested a national minimum wage of ₹375 per day and a monthly salary of ₹9,750.
In addition to the monthly pay, the panel had also suggested that a housing allowance of ₹1,430 be provided for city-based workers.
Experts have been demanding a national minimum wage for years and argue that this will benefit a sizable portion of the workforce. The Economic Survey of 2018 -2019, 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 can help in driving up aggregate demand and building and strengthening the middle class, and thus spur a phase of sustainable and inclusive growth,” the Economic Survey 2019 had said.
“Delay in implementing a national mandatory wage will hamper labour welfare and hamper aggregate demand. The committee has a life of three years, but government may issue the terms of reference separately giving a time frame when they will submit the report,” said K.R. ShyamSundar, a labour expert.