Centre may raise national minimum wage ahead of Lok Sabha elections, panel recommendations awaited

A mandatory national minimum wage hike could be on the horizon as the central government considers adopting the suggestions of a high-level expert panel, The Economic Times reported. Officials anticipate that the recommended floor wage, set by an expert committee led by SP Mukherjee since 2021, might be enforced before the upcoming general elections scheduled for April-May this year, it added.

The committee, established for a three-year term until June 2024, is on the verge of submitting its report, sources told the paper. “The report is nearly complete, with the committee expected to finalise it after one last round of meetings,” they added.

With approximately 500 million workers, 90 percent of whom are in the unorganised sector, the current floor wage stands at ₹176 per day, last revised in 2017. This rate is not statutorily binding for states. Officials argue that an overdue revision is necessary to account for the rising cost of living and inflation.

The proposed new minimum wage, if implemented, would be mandatory across states, empowered by the Code on Wages, 2019, granting the central government authority to establish the floor wage based on a worker’s minimum living standards.

In 2019, a committee led by Anoop Satpathy suggested a floor wage of ₹375 per day, a proposal rejected by the government due to substantial financial implications for employers. Stakeholders are hopeful that the current committee will strike a balance between the existing ₹176 per day and the previous ₹375 per day recommendation.

An employers’ representative involved in the discussions told the paper, “The committee is expected to arrive at a balanced wage to minimise financial implications on employers, both central and state governments.” The committee is likely to consider inflation and household expenditure costs in determining the new floor wage, taking into account nutritional and non-food requirements.

As per the Code on Wages, 2019, the government has the authority to set different floor wages for various geographical areas. However, it prohibits reducing wages if the minimum rates set by the appropriate government exceed the existing floor wage. Currently, some states have set their daily wage floor lower than ₹176, while others have a higher rate, contributing to disparities in minimum wages and impacting the movement of migrant labourers within the country.

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