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Wage floor of 115 set to get legal stamp on support from states

Unskilled workers will soon be legally entitled to a minimum daily wage of 115 with states agreeing to endorse the centre's proposal to make the National Floor Level Minimum Wage statutory.

, ET Bureau|
May 28, 2011, 02.57 AM IST
NEW DELHI: Unskilled workers will soon be legally entitled to a minimum daily wage of 115 with states agreeing to endorse the centre's proposal to make the National Floor Level Minimum Wage statutory.

The move will potentially benefit 360 million workers across the country, most of whom are engaged in agriculture and related activities.

It will also make the wages consistent with those paid under the government's flagship rural jobs scheme, the Mahatma Gandhi Rural Employment Guarantee Act.

Minimum wages for unskilled workers in at least half the states are below 115, according to government figures published in March.

States such as Maharashtra, Andhra Pradesh, Orissa, Manipur, Nagaland, Uttarakhand and Tamil Nadu are among the worst performers.

"State governments have already given their approval to the proposed amendment and most Central ministries and departments have also got over their initial reservations," Labour Secretary P C Chaturvedi told ET.

Some ministries and departments were initially concerned over the financial implications of a statutory floor level for wages, as state-run companies employ a number of contract workers.

A study by the Noida-based VV Giri National Labour Institute had estimated a 2,300 crore increase in employers' annual wage burden if the government was to enforce a minimum wage of 100 a day.

Chaturvedi said a committee of secretaries is expected to finalise the amendments to the Minimum Wages Act of 1948 in its next meeting. The draft would then be sent to the Cabinet for its approval.

"We hope to place the matter before Parliament in the monsoon session," he said.

Once statutory, the national floor level will become binding on all states and they will have to ensure that unskilled workers are paid the minimum wages fixed by the Centre.

States, however, will have the liberty to prescribe a minimum wage higher than that fixed by the Centre.

The Centre had proposed the National Floor Level Minimum Wage to ensure a uniform wage structure and to reduce the disparity in minimum wages in the country.

But in the absence of a legal backing, the Centre could merely persuade states to revise the minimum wages in scheduled employments.

The national floor is linked to the Consumer Price Index Number for Industrial Workers and is revised from time to time. It is currently fixed at 115 a day.

If implemented in earnest, the law will have the maximum impact on farm labour.

"If you examine existing wage levels, it is mostly in the agriculture sector that you will notice relatively low wages," Chaturvedi said.

In a survey conducted between July 2007 and June 2008, the National Sample Survey Organisation had found wages varying from 61 a day for casual labour to 227 a day for regular or salaried employees.

Organisations representing workers have welcomed the move to give legal backing to the National Floor Level Minimum Wage.

"It will improve the condition of workers in states that have low minimum wages," said D L Sachdev, secretary, All India Trade Union Congress.

Enforcement of the statutory wage levels, however, would be a challenge for the Centre as it would be difficult to keep a tab on thousands of employers in the unorganised sector.

Ravi Wig, president of the Employers Federation of India, says the government can overcome this problem by involving the employers in the decision making process.

"Minimum wages should be decided through a tripartite process, which should include employers, employees and the government," he said.
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