What is the Minimum Wage in India?


minimum wage in india

The Indian Constitution has defined a ‘living wage’ that is the level of income for a work which will ensure a basic standard of living including good health, dignity, comfort, education and provide for any contingency. However, to keep in mind an industry’s capacity to pay the constitution has defined a ‘fair wage’. A fair wage is that level of wage that not just maintains a level of employment but seeks to increase it keeping in perspective the industry’s capacity to pay.

Legislative protection for workers to receive a minimum wage can be considered as the hallmark of any progressive nation. It is one of the fundamental premises of decent work. In India, the Minimum Wages Act, 1948 provides for fixation and enforcement of minimum wages in respect of scheduled employments. In order to reduce this problem and bring comparability the Central government has set up 5 regional committees (table below) for harmonization of minimum wages. Since the respective state governments have been empowered to independently fix minimum wages, disparities between wages in neighbouring states are common.

To achieve this in its first session during November 1948, the Central Advisory Council appointed a Tripartite Committee of Fair Wage. This committee came up with the concept of a minimum wage, which not only guarantees bare subsistence and preserves efficiency but also provides for education, medical requirements and some level of comfort.

Currently, the number of scheduled employments in the Central sphere is 45 whereas in the States sphere the number is 1650 (when all states are counted). With effect from November 2009, the National Floor Level of Minimum Wage (NFLMW) was increased to revised from Rs 100/day (2007) to Rs 137/day. In July 2015 the National Floor Level of Minimum Wage was raised to Rs 160 per day. National Floor Level Minimum Wage has been revised again to Rs 176/day. The new rates came into effect from June 1, 2017.

AIMS

  • The Act aims to prevent sweating or exploitation of labour1( According to the NSSO (2004-05) 61st round, around 395 million workers (86%) out of the total workforce of around 457 million workers constitute the unorganized/informal sector.
  • In fact, 7% of those employed in the organized sector has been identified as informal workers raising the toll of the informal sector to 422 million (92%).
  • Through payment of low wages by ensuring a minimum subsistence wage for workers.
  • The Act also requires the appropriate government (both at Centre and States) to fix minimum rates of wages in respect of employment specified in the schedule and also review and revise the same at intervals not exceeding five years. If an employee is involved in work that categorizes his service in two or more scheduled employments, the employee’s wage will include respective wage rate of all work for the number of hours dedicated at each task.
  • It is mandatory for the employer to maintain records of all employee’s work, wages, and receipts.
  • Appropriate governments will define and assign the task of inspection and appoint inspectors for the same.
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