Why Code On Wages 2019 May Not Ensure Arresting Decline In Wages


According to the International Labour Organisation’s (ILO) Global Wage Report 2020 published earlier in December, formal sector workers in India witnessed a 3.6 percent fall in wages whereas the workers from the informal sector suffered a 22.6 percent wages cut.

“Early data from national statistical offices show that around two thirds of countries for which short-term statistics are available showed decreasing wages or slower average wage growth,” it said.

“Considering that the lockdown in India continued for 3-4 months, the wage cut figures by ILO seems like a gross underestimation. The fall in wages cuts for both the formal sector at only 3.6 percent and for informal workers at 22.6 percent would have been much severe. The ILO number’s do not capture even the tip of the iceberg,” K R Shyam Sundar, Professor – HRM, XLRI, Xavier School of Management, said.

“India underwent a 24 percent fall in GDP growth in the first quarter and made only a little improvement in next quarter. So it is highly unlikely that the impact on the wages of the workers has been so little,” remarked Sundar.

Explaining why the Code on Wages 2019 which stipulates determining the floor wages by the government may not necessarily arrest the occurrence of fall in wages in future, Sundar argued,“It is a very symbolic gesture on the part of the government. In my opinion the government will opt for a very conservative revision as there has been a deceleration of growth with massive liquidity crunch and revenue models being affected.”

The Code of Wages which was passed in August 2019 makes provisions for minimum and timely payment of wages to all the workers in India. The code introduces the concept of floor wages wherein the rates will be fixed by the central government by taking into account the minimum living standards of the workers.

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