Fixation of National Minimum Wage Expert Committee and Govt announcement

Excerpts from  the Report of Dr Anoop Satpathy Committee

Expert Committee  for Fixing National Minimum Wage

1.      in 1948, the government enacted the Minimum Wages Act to ensure that workers in low-paid informal jobs were paid the minimum wage. In 1996, it went on to introduce a uniform and non-binding National Floor Level Minimum Wage (NFLMW) to address disparities in minimum wages within and across states in various scheduled employments, on the basis of recommendations made by the National Commission on Rural Labour (1991)

2.      In line with this priority area and to enhance effectiveness of India’s wage policy, the Government of India introduced a Code on Wages Bill in Parliament in August 2017, which simplifies, amalgamates and rationalizes four Acts; it also recommends the introduction of a binding National Minimum Wage (NMW). This would imply fixing a single national minimum wage – or different national minimum wages for different states or geographical areas. The passage of the Code in Parliament over the coming days will extend the benefits of minimum wages to all workers, which is in keeping with the provisions of the ILO Minimum Wage Fixing Convention, 1970 (No. 131)

3.      the Ministry of Labour and Employment constituted an Expert Committee on 17 January, 2018, acting upon the advice of the Central Advisory Board (CAB) on minimum wages. The Committee was set up under the Chairmanship of Dr. Anoop Satpathy (Fellow, the V. V. Giri National Labour Institute, NOIDA), with members from the ILO and the Wage Cell of the Ministry.

4.      In its report, it recommends a methodology based upon constructing a nationally representative and culturally palatable food basket, that adheres to a balanced dietary approach rather than one focused on calorie intake. The Committee also makes major recommendations relating to the level of national and regional minimum wages, additional rent allowances for urban workers, and the periodic revision and adjustment of the NMW.

Heralal Samaria  secy Labour dept  8-1-2019

Foreword

1.      Apart from universalizing wage protection coverage, it is also of utmost importance to set minimum wages at a level which ensures a living wage, and reduces wage disparities to further contribute to enhancing productivity and economic growth. The Committee by recommending the level of the national minima provides the social partners and stakeholders with a momentous opportunity to undertake further consultation and dialogue process to fix the national minimum wage at an agreed level

2.      Apart from proposing the level of a single national minimum wage at an all-India level, the Committee has also estimated and recommended different national minimum wages for different geographical regions of the country to suit the local realities and as per socio-economic and labour market contexts. Furthermore, the Report has also introduced a city compensatory allowance by recommending an additional house rent provisions for urban workers over and above the subsistence level of national minimum wage

Manish Gupta Jt secy  8-1-19

Executive Summary

1.      Chapter 2 gives a detailed account of minimum wage policy in India, which started as early as 1929 with the Royal Commission on Labour, culminating in the Payment of Wages Act, 1936. In 1943, the Labour Investigation Committee was established, on the recommendation of the Labour Standing Committee and the Indian Labour Conference (ILC), to look into the issues of labour conditions and minimum wages and come up with proposals. The outcome was the Minimum Wages Act, which came into force in 1948 and set a framework for fixing minimum wages in certain employments. The absence of criteria in the Minimum Wages Act 1948 to determine minimum wages has been filled by the ILC, 1957, and the Supreme Court (SC) 1992 recommendations providing guidelines for this purpose

2.      Various committees, commissions and expert groups have subsequently shaped minimum wages policies in India, including the first and second National Commissions on Labour (NCL) – 1969 and 1999–2002, respectively – which provided relevant guidelines with respect to wage policy.

3.      In August 2017, the Government of India introduced the Code on Wages Bill in the Lok Sabha, which consolidated four Acts and recommended a binding national minimum wage with the option to have regional minimum wages. The latter constitutes one of the salient features of the Bill, which will ensure a universal coverage to wage workers in the Indian labour market. The guiding principles for calculating the minimum wage in India, as established by the ILC and the Supreme Court (SC) milestone judgment (1992), are accepted standards for calculating the minimum wage

4.      Chapter 3 of the report reviews the salient features of ILO Conventions and Recommendations on minimum wages, particularly the Minimum Wage Fixing Convention No. 131 (1970).

5.      Chapter 4 describes how the methodology adopted by the Expert Committee to estimate minimum wages is in line with the broader guidelines recommended by the ILC in 1957 and the SC judgement of 1992. The Expert Committee, drawing upon a range of official data sources, produces new evidence on the Indian population’s changing nutritional requirements and nutritional intakes, the demographic structure and per family consumption unit, and levels of food and non-food consumption. It proposes a balanced diet approach, which is culturally palatable and takes into account calorie, protein and fats requirements – compared to the erstwhile approach of only considering calories – for estimating the minimum food expenditure required for maintaining the work efficiency of workers and their families’ healthy living

6.      The basic methodology for estimating the NMW at the regional level remained the same as that of the estimation of NMW at the national level - with slight variations, wherein the national consumption basket was retained as a standard yardstick for each of the regions and the regional-level average unit prices specific to each region were used to arrive at the total food consumption expenditure for each region.

7.      China adopted a minimum wage in 1994 and has strengthened its policies since 2004; Brazil re-activated its minimum wage policy in 1995 and has accelerated its adjustments from 2005 to 2016 in line with economic growth; the Russian Federation complemented its national minimum wage with regional floors in 2007; and South Africa established a system of minimum wages after the end of apartheid in 1997 and adopted a national minimum wage policy in 2018. With respect to the two Asian countries, Viet Nam has seen its minimum wage policy evolve over the past few years. Since 2012, the system has set differentiated minimum wages for its four regions. Malaysia, for its part, established the National Wages Consultative Council in 2011 to set minimum wages on a regional basis for three distinct geographical areas: Peninsular Malaysia, Sarawak and Sabah (and Labuan)

8.      Chapter 6 contains the Expert Committee’s detailed recommendations, relating to fixing need-based and evidence-based national and regional minimum wages, based on comprehensive review of the present methodology.

These include: (i) increasing the previously established three consumption units per worker’s family to 3.6 consumption units;

Iii setting the minimum wage at a level that would allow for a minimum recommended intake (per adult person per day) of 2,400 calories, 50 grams of protein and 30 grams of fats;

(iv) ensuring that the required expenditure of essential non-food items (namely clothing, fuel and light, house rent, education, medical, footwear, and transport) be equal to the median class of the expenditure distribution, and that of the other non-food items be equal to the expenditure for the sixth fractile (25-30 per cent) of the distribution in the NSSO-CES 2011/12 survey data;

(v) setting the single value of the NMW for India at ₹ 375 per day (or ₹ 9,750 per month) as of July 2018, irrespective of sectors, skills, occupations and rural-urban locations, and introducing an additional house rent allowance (city compensatory allowance), averaging up to ₹ 55 per day i.e., ₹ 1,430 per month for urban workers over and above the NMW;

(vi) establishing the NMW for five different regions with diverse socio-economic and labour market situations, ranging from a low of ₹ 342 per day (or ₹ 8,892 per month) in Region I to a high of ₹ 447 per day (₹ 11,622 per month) in Region IV; and

(vii) reviewing the consumption basket every five years, subject to the availability of NSSO-CES data, and – during the internal period - revising and updating the basic minimum wage at least in line with the consumer price index (CPI) every six months, to reflect changes in the cost of living

 Contrary  Govt Announcement to this Report

1.      the labour minister in Modi government, Santosh Kumar Gangwar, on 10^th july 2019 announced at a press conference that the new floor level minimum wage for the country will be Rs.178 per day. This translates to Rs. 4,628 per month.

2.      Second, and more importantly, the new wage rate announced is a mere Rs. 2 more than what was declared two years ago. Just a 1% increase in two years? This is less than the inflation rate in the past two years, meaning that in real terms, it would be a decline

3.      In fact, 31 states and Union territories in the country have current minimum wage levels higher than what Gangwar announced

4.      In India, over 1,600 jobs are currently listed in Schedules across states and the Central government. NFLMW is specifically meant to recommend wage levels for non-scheduled jobs which may run into thousands.