State governments have agreed to a proposal to amend the Minimum Wages Act to make the National Floor Level Minimum Wage statutory. The move has brought cheer to neither economists nor workers leaders, as the floor level minimum wage as a concept has not been sorted out till now. Trade unions call it a mere propaganda stunt by the Government rather than real reform meant to help workers.
It is just an ad hoc rate foisted on the nation 12 years ago by the Labour Ministry and not in accordance with the norms worked out by the 15th Labour Conference of 1957, which asked for calculating a base wage that would accommodate the basic needs of a worker including food, housing, health and other social costs, says All India Trade Union Congress state secretary D L Sachdeva.
The Labour Ministry has been periodically revising the National Floor Level Minimum Wage annually based on the consumer price index.
The state Labour Ministers who attended a conference yesterday called by the Union Labour Ministry agreed to the proposal which the latter has been desperately pushing for the last three years.
The Centre had taken the proposal to Cabinet in 2009 but after objections by some ministries it was taken to the Committee of Secretaries. The CoS suggested that the matter be taken to the state governments and their consent taken.
The state Labour Ministers conference was called this week to thrash out the issue.
The National Floor Level Minimum Wage at present is Rs 115 but states continue to have minimum wages in various industries that are much below this rate.
The minimum wage in the case of many of the scheduled works in many states are much below the floor level rate of Rs 115, prompting the Centre to go for an amendment.
For instance Gujarat pays a minimum wage of Rs 100 for agricultural workers, Rs 55 to Rs 65 for agarbati makers. The amendment would compel these units to keep the wages now lower than Rs 115. Orissa has wages much below Rs 115 in most industries like automobile, explosives, metal industries, pharmaceuticals, power looms, shops, and so on.
Economists like Pronob Sen feel that artificially jacking up minimum wages in states based on standards calculated at the Centre would not reflect local needs and would raise costs and prices locally.
Indian Staffing Federation vice president Rituparna Chakraborty feels that imposing a rate on all states could be dangerous. If some states have higher rates, their units may go for the minimum rate prescribed by the Centre. Wherever the rates are found unfavourable it may just push jobs into unorganised sector .''
"States should be given the option of calculating and fixing their wage taking into account cost of living, besides demand and supply," she says.
Says Sachdeva: The concept of floor rate is vague. Floor level means it is the lowest level allowed. But it wont have much impact as the whole issue is being dealt with in a piece meal manner rather than in a comprehensive way. You need a base rate. That was never worked out properly despite the 15th Labour Conference of 1957 recommendations or the Supreme Court verdict in the Raptakos case in 2000 where it said that the various needs of the worker should be taken into account while calculating wages. It is propaganda not reform. They started with Rs 60 about 12 years ago. It was ad hoc then. And now it has been revised yearly.
AITUC and some other unions not only feel that a base rate has to be worked out, they also feel that the Rs 115 wage is just not acceptable as it is too low. "We are for anything between Rs 10,000 and Rs 15,000 as minimum wage for all," says Sachdeva.