The labour ministry will shortly seek Cabinet approval on a Bill making mandatory for states to implement wage that will be linked with consumer price inflation. The move could benefit millions of workers especially in the unorganised sector.
The amendment in the Minimum Wages Act has become necessary as many states have not implemented the national floor level minimum wage (NFLMW), which is now at R115 per day.
“The Bill will be taken up by the Cabinet in a few weeks. The NFLMW will become compulsory across the country once the Bill is enacted,” labour secretary M Sarangi told FE. “The NFLMW will be raised in 2013,” he said.
Another official said the NFLMW could be raised to R125-130 per day from Rs 115.
Since the Minimum Wages Act is optional for states, wages vary across the country. For instance, the wages offered to unskilled workers in Assam, Jammu & Kashmir, Meghalaya, Nagaland, Orissa and Tripura are lower than R115 a day while it is much higher in Kerala and Delhi.
Even within a state, wages offered to unskilled workers vary a lot — R69-231.71 a day in Andhra Pradesh, R85.20-353 in Kerala, R88.29-222.35 in Tamil Nadu, R100-248.15 in Maharashtra and R98.67-200.77 in Uttarakhand, indicating workers in some sectors in these states are still not covered under NFLMW.
The Centre has sought views of states before finalising the Cabinet note on amendment to the Minimum Wages Act. There was broad agreement over the hike in minimum wage rate.
“The wage will be linked to CPI inflation rate,” Sarangi said. Though the government introduced a variable dearness allowance (VDA) in 1989 to protect wages against inflation, at least 11 states and Union territories have not implemented it.
Some states have expressed reservation over frequent hike in wages as it would put poorer states into disadvantageous position.