As per the Economic Survey 2018-19, there is a pressing need for a well-structured minimum wage system in India to address the issue of wage inequality. The International Labour Organisation’s India wage report elaborates that one-third of wage workers in India are not safeguarded by the minimum wage act. This article delves into the current inadequacies of the Minimum Wage System, the necessity for its redesign and the critical role technology can play in this reform.
Shortcomings of the Existing Minimum Wage System
Currently, the minimum wage system laid down by the Minimum Wages Act of 1948, lacks uniformity as it defines different minimum wages for various job categories across States. There are 1,915 designated minimum wages for a range of scheduled job categories across different states. This lack of a uniform criterion for establishing the minimum wage rate has led to wage disparities, triggering industry migration towards low wage regions and distress migration of labour towards better-paying states.
Further, analysis of minimum wage data shows a systemic gender bias as well. For instance, male-dominated jobs, such as security guards, offer higher pay than professions like domestic workers, which see a larger female workforce. In terms of National Floor Level Minimum Wage (NFLMW), many states have set minimum wages below the non-statutory NFLMW of Rs 176 per day.
Need for Restructuring the Minimum Wage System
The Economic Survey suggests the rationalization of minimum wages, as proposed under the Code on Wages Bill. The bill aims to absorb the Minimum Wages Act (1948), the Payment of Wages Act (1936), the Payment of Bonus Act (1965) and the Equal Remuneration Act (1976) into a unified legislation. Under this new law, the 12 separate definitions of wages across various Labour Acts should converge into one comprehensive definition.
The Survey also recommends that the Central Government should notify a National Floor Minimum Wage, varying across five geographical regions. Consequently, states would have to set their minimum wages not below the ‘floor wage’, ensuring wage uniformity across the country and making all states equally appealing for investment.
Proposed Mechanisms for Setting Minimum Wage
The Survey advocates for a criteria-based approach for fixing minimum wages under the Code on Wages Bill. This system would consider either of the two factors: skill category (unskilled, semi-skilled, skilled, highly skilled) and geographical region, or possibly a combination of both.
In addition, it is suggested that the minimum salary needs regular and frequent adjustments to keep up with inflation.
Table: Facts About the Current Minimum Wage System
| Factors | Data |
|---|---|
| Total defined minimum wages | 1915 across various job categories |
| Number of labour acts with definition of wages | 12 different Labour Acts |
| NFLMW | Rs. 176 per day |
Role of Technology in Wage System Redesigning
Technology can become a cornerstone in the processing of wage-related information and tracking compliance. The survey suggests that a combination of online, mobile phone, and networking technologies could facilitate the collection and analysis of labour statistics. This technology-driven approach could also help with the dissemination of information about labour laws and policies while reducing costs and enhancing transparency. A national dashboard at the central level, with accessibility for state governments, could be created for states to regularly update notifications concerning minimum wages. This portal should be made available at Common Service Centres and rural haats, affirming the critical role technology can play in reforming the minimum wage system in India.
