Minimum wage panel may opt for multiple criteria model
- October 14, 2021
- Posted by: OptimizeIAS Team
- Category: DPN Topics
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Minimum wage panel may opt for multiple criteria model
Subject – Governance
Context – Minimum wage panel may opt for multiple criteria model
Concept –
- Moving away from nutritional requirement as a criteria to fix minimum wages, the newly reconstituted expert committee, may opt for Multi Criteria Decision Making method to fix the amount.
- The MCDM will also address employers’ views while suggesting the minimum wage.
- The new chairman of the panel, statistician and economist SP Mukherjee, told that most of the examples of minimum wages practices in various countries, found in International Labour Organisation’s (ILO) compendium, have not adopted a scientific approach.
- The latest report on the matter, submitted by Anoop Satpathy also used a tool based on “demographic structure, consumption pattern and nutritional intakes, the composition of food baskets and the relative importance of non-food consumption items to address the realities in the Indian context by using official data made available by the National Sample Survey Office (NSSO)”.
- The panel will also see whether the minimum wage should vary from one level of occupation to another and from one region to another.
- The three criteria, Mukherjee explained, include how the policy and the amount will impact the living quality of workers.
- How it will improve their standard of living is the question.
- Secondly, if we increase the minimum wages substantially, what is going to be the impact on employment.
- If the owner of a small establishment has to pay higher than what he is paying now, he may have to minimise his profit or close down the business which will impact the employee too. So the impact of any policy on employment has to be studied,” Mukherjee said.
- The third criteria will be the impact of minimum wage on industrial disputes.
- Will disputes get easily resolved or will it reach higher in numbers? Will it become more complicated? This is related again on enterprises and establishments operating in various States. The policy has to be scientific, Mukherjee added.
Code on Wages Act 2019
- The new wage code removes the multiplicity of wage definitions, which can significantly reduce litigation as well as compliance cost for employers.
- The new Act links minimum wage across the country to the skills of the employee and the place of employment.
- It seeks to universalizes the provisions of minimum wages and timely payment of wages to all employees irrespective of the sector and wage ceiling.
- It seeks to ensure “Right to Sustenance” for every worker and intends to increase the legislative protection of minimum wage.
- A National Floor Level Minimum Wage will be set by the Centre and will be revised every five years, while states will fix minimum wages for their regions, which cannot be lower than the floor wage.
- It subsumes the following four labour laws:
- The Payment of Wages Act, 1936
- The Minimum Wages Act, 1948
- The Payment of Bonus Act, 1965
- The Equal Remuneration Act, 1976.
Types of Wages
- Minimum Wage: International Labour Organisation defines it as “the minimum amount of remuneration that an employer is required to pay wage earners for the work performed during a given period, which cannot be reduced by collective agreement or an individual contract”.
- The minimum wage includes the bare needs of life like food, shelter, and clothing.
- Living Wage: It is the wage needed to provide the minimum income necessary to pay for basic needs based on the cost of living in a specific community.
- In addition to bare needs, a ‘living wage’ includes education, health, insurance, etc.
- Fair Wage: A ‘fair wage’ is a mean between ‘living wage’ and ‘minimum wage’.
- Starvation Wage: It refers to the wages which are insufficient to provide the ordinary necessities of life.