Minimum wage plan fast-tracked by govt with an eye on LS polls

NEW DELHI: The government is trying to rush through new minimum wage rules with general elections just around the corner. It’s fast-tracking a plan for a legally backed mandatory level to ensure that workers across sectors are not paid below the minimum wages set by states. In the works since 2010, the move may help the Congress-led United Progressive Alliance appeal for votes as a party concerned with the well-being of the poor and the disadvantaged. The proposal for the national floor is among the clutch of amendments to the Minimum Wages Act, 1948, that the Cabinet will consider at its meeting this week. However, experts say the eleventh-hour scramble in the run-up to the polls appears to be driven more by the desire to be seen as doing something about the matter than real commitment to reform since the proposed amendments are unlikely to make it through Parliament during the current government’s tenure.

According to National Labour Institute estimates, the proposed national floor will result in a 2-3.5% reduction in poverty. Labour experts say pay for about 10% of scheduled jobs are at levels below the minimum wage rates notified by state governments.

The proposed mechanism will mostly impact the private sector since the prevailing wages in the government and central public sector exceed the national floor rate. The proposed national floor, which will be reviewed and revised at intervals no greater than five years, will make mandatory a subsistence level wage for the lowest paid labourers.

However, the state governments will have the flexibility to fix minimum wages above the national floor. The labour ministry has suggested doing away with the provision in the minimum wages act that makes payment of minimum wage mandatory only for establishments with 1,000 or more workers. The ministry has proposed increasing penalties for violating the provisions of the Act from Rs 500 to Rs 5,000 for the first conviction while for repeat offenders the fine will be Rs 10,000 or up to a year of imprisonment.