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Minimum Wage Code Bill

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August 10, 2017

Why in news?

The Union Cabinet has approved the new wage code bill.

What is the bill about?

  • It will ensure a minimum wage across all sectors by integrating four labour related laws.
  • It will consolidate the Minimum Wages Act, 1948; the Payment of Wages Act, 1936; the Payment of Bonus Act, 1965; and the Equal Remuneration Act, 1976.
  • It signals a formal start of the process of consolidating 44 labour laws into four codes.
  • At present, every state decides the minimum wage for different industries and labour classifications.
  • The bill seeks to empower the Centre to set a minimum wage across all sectors in the country and states will have to maintain that.
  • States will not be able to pay less than the national floor; however, states will be able to provide for higher minimum wage in their jurisdiction than fixed by the central government.
  • At present, the minimum wages fixed by the Centre and states are applicable only to workers getting up to Rs 18,000 pay monthly.
  • The new minimum wage norms would be applicable for all workers irrespective of their pay. 
  • The proposed legislation is expected to benefit over 4 crore employees across the country.

What are the concerns with the code?

  • The point of labour law reform is to make regulation less intrusive and more effective.  However, the wage code is doubtful of making this effect.
  • It seeks to expand the reach of minimum wage regulation to non-formal jobs. The scope for intervention in business by government inspectors has thus been vastly increased.
  • The code assumes a single national floor for wages for a country as diverse as India, with so many variations to costs of living.
  • This ignored local and sectoral conditions.
  • Such regulations have often resulted in the decrease of the number of such jobs.
  • The code looks less like labour law reform and more like another entitlement which could be counter-productive to the intended aims.


Source: Business Standard

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