What is Minimum Wage?
Historical Background
Key Points
10 points- 1.
Legal mandate: Enforced by the Minimum Wages Act 1948 and now subsumed under the Code on Wages 2019.
- 2.
Fixation criteria: Wages are fixed based on factors like cost of living, productivity, capacity to pay, and regional differences.
- 3.
Scheduled employments: The Act specifies 'scheduled employments' for which minimum wages are to be fixed and revised periodically.
- 4.
National Floor Wage: The central government can fix a National Floor Wage, below which no state government can fix its minimum wages.
- 5.
Varying rates: Minimum wages vary significantly across states, industries, and even within different regions of a state.
- 6.
Enforcement challenges: Implementation is a major challenge, especially in the informal sector, due to lack of awareness, weak enforcement machinery, and fear of job loss.
- 7.
Impact on poverty: Aims to reduce poverty and income inequality by ensuring a basic income for low-wage workers.
- 8.
Economic debate: Debates exist on its impact on employment (potential job losses if wages are too high) and inflation.
- 9.
Constitutional backing: Supported by Article 43 of the Directive Principles of State Policy, which mandates a living wage for workers.
- 10.
Revision mechanism: Wages are revised periodically, typically every five years, or when the cost of living index rises significantly.
Recent Developments
5 developmentsThe Code on Wages 2019 aims to simplify and universalize the concept of minimum wage, making it applicable to all employees across all sectors.
Debate on a 'universal basic wage' or a 'national minimum wage' that is truly a living wage.
The Expert Committee on Minimum Wages (2019) recommended a national floor wage of ₹375 per day, which is still under consideration.
Discussion on extending minimum wage provisions to gig workers and platform workers, as they are often excluded from traditional labor laws.
Focus on digital enforcement and awareness campaigns to improve compliance.