States should have the power to determine minimum wages: CII

Says national minimum wage will hit job creation

The Confederation of Indian Industry (CII) has called upon the government, outlining the need for Inter-ministerial and All-State National Employment Boards to deal with the jobs crisis in the country.

According to the Chamber, these boards can include representatives of key ministries, state governments, industry experts, and trade unions who will look into employment creation hurdles and address them on a real-time basis.

It has also called for a national employment mission. "This should include flexibility in hiring, tax incentives, education and skill development, and promotion of labour-intensive sectors,” Chandrajit Banerjee, Director General at CII, said.

Budget push

CII has outlined a five-point agenda for the upcoming Budget. First among these is the suggestion that states that introduce Fixed Term Employment and other Labour law reforms should receive priority in new Central infrastructure project funding. They also said that transport and power projects along with industrial parks can be fast-tracked for these states to enable them to leverage such employment policies.

Secondly, benefits under Section 80JJAA of the Income Tax Act should be extended for all workers earning up to Rs 50,000 in any sector. The number of working days has been reduced to 150 for workers in the textile, garment, footwear and leather sectors, and this can be extended to all manufacturing sectors.

The business chamber has also batted for the wage threshold under the Pradhan Mantri Rojgar Protsahan Yojana (PMRPY), to be increased to Rs 25,000 from Rs 15,000. Under this scheme, the Government of India will provide the full contribution to EPF and EPS for employees earning less than Rs 15, 000, for three years.

“With wages increasing, the threshold for applicability should also be raised," CII.

Corporate income tax rebates should be considered for enterprises employing over a certain number of formal workers, a CII functionary said.

Lastly, skill vouchers and skill wallets may be provided to hone their skills. This is in accordance with the Skill India Mission of incentive-based support rather than subsidy-based support.

Wage issues

Commenting on the suggested national minimum wage, CII said that states should have the power to determine minimum wages based on three criteria - geographic location, skill and occupation. However, it cannot be lower than the minimum wage fixed by the Centre. The concept of a national minimum wage will affect job creation, so it is necessary to give States power to fix their minimum wages. 

The government should fix minimum wages of unskilled workers; however, wages of skilled and semi-skilled labour force should be determined by market forces,  CII added.

The CII also recommended providing Child Care & Maternity Benefit subsidies under the Maternity Benefit Amendment Act to encourage more women to participate in the workforce. “While industry is not asking for a hire-and-fire policy, a more flexible labour regime would enable India to align with multiple global trade challenges at a time when other nations are attracting new investments,” said CII.