Minimum Wage 

Minimum Wage 

Subject: Economy

Section: Inflation

Context:

The expert committee on minimum wages, headed by statistician and economist SP Mukherjee, has finalized a methodology to calculate the minimum wage based on nutritional requirements and consumption expenditure.

Details:

The total monthly consumption expenditure in households, the total intake of calories, level of total expenditure corresponding to the recommended calorie intake in terms of interpolation of the results of the 68th round of NSSO survey on- ‘Household Consumer Expenditure’ and ‘Employment and Unemployment’ which was held in 2011-12 will be taken into account.

Minimum Wages Act in 1948

• India introduced the Minimum Wages Act in 1948, giving both the Central government and State government jurisdiction in fixing wages. 
• The act is legally non-binding, but statutory.
• Payment of wages below the minimum wage rate amounts to forced labour.
• Wage boards are set up to review the industry’s capacity to pay and fix minimum wages such that they at least cover a family of four requirements of calories, shelter, clothing, education, medical assistance, and entertainment.

Under the law, wage rates in scheduled employment differ across states, sectors, skills, regions and occupations owing to differences in costs of living, regional industries’ capacity to pay, consumption patterns, etc. Hence, there is no single uniform minimum wage rate across the country and the structure has become overly complex. 

Fixation of Floor Wage:

• The Code on Wages, 2020 mentions the concept of a floor wage, which empowers the central government to fix floor wages taking into account the minimum living standards of workers.
• The floor wage is a baseline wage below which minimum wages cannot be fixed by state governments.
• The Wage Code permits the fixation of different floor level wages for different geographical areas.
• Also, the wage rules do not outline the exact criteria and methods for fixation of floor wage rates by the Central Government.