Minimum Wage

Minimum Wage is the lowest hourly, daily, or monthly pay rate that companies are mandated by law to offer their employees.

It is intended to give workers a foundational level of income and to shield them from being given wages that are regarded to be too low to support a respectable quality of living.

Governments may impose national or regional minimum wage regulations, which are generally applicable to all industries and occupations, with some exceptions.

The particular minimum wage varies by nation and may even differ by region or state within a nation.

Minimum Wages Act: Provisions

• India’s Minimum Wages Act, passed in 1948, establishes the minimum wage rates that firms must by law pay to their employees.
• All businesses and establishments covered by its requirements must comply with the statute.
• According to the legislation, minimum wages can be set by the relevant government for various industries or groups of workers depending on things like skill level, type of job, and location, adjusted from time to time.
• It is applicable to all types of businesses, factories, and enterprises. Unscheduled industries are often excluded, however during a revision cycle, a state may add a minimum wage for a profession or specify it for a sector.
• The act establishes the maximum daily and weekly hours that an employee may work and provides overtime pay for work performed in excess of these limits.
• The act gives the government the authority to appoint inspectors to check for compliance with its requirements and penalize firms who do not.

Minimum Wages Act: Indian scenario

• As of April 2023, the minimum wage in India varies by state and industry, from about INR 178 ($2.37 USD) per day to INR 858 ($11.50 USD) per day.
• The national minimum wage for unskilled workers in the “C” category areas, which comprises the majority of the country’s rural areas, has also been set by the federal government at INR 202 ($2.72 USD) per day as of 2021.
• According to the Minimum Wages Act, the average monthly wage for unskilled labour in India falls between INR 2250 and INR 70,000, according to the majority of media. However, the average wage in India is only about INR 32,840, or about $428.49.
• The Central Act considers underpayment and nonpayment of the Minimum Wage to be offences. According to Section 22 of the Act, the punishment might include a fine of Rs. 10,000 and a 5-year prison sentence.
• The Minimum Wages Act of 1948 limits the number of hours that can be worked each week to 48, with a daily maximum of 9 hours.
• Work performed outside of these hours must be compensated with overtime. Different working hour restrictions may be outlined in state-specific legislation.

Minimum Wage vs Floor Wage:

Minimum Wage: Issues

Low minimum wage levels:

• In India, the minimum wage scale varies depending on the state and the industry.
• Given the high cost of living in cities, the minimum wage is frequently too low to allow workers to maintain a respectable quality of life.
• Among low-wage workers, this may result in exploitation and destitution.

Inadequate protection:

• Indian minimum wage rules do not adequately protect all workers, especially those employed in the unregulated, unregulated sector, such as domestic workers and construction workers.

Lack of transparency:

• There are questions about the fairness and sufficiency of the minimum wage rates in India because the process for setting them is frequently opaque and lacking transparency.
• In addition, many employees are taken advantage of by their employers because they are uninformed of the existence of the minimum wage or floor pay.
• Employers even pay less than the mandated minimum wage.

Inadequate benefits:

• Many Indian workers do not obtain even the most basic benefits, such health insurance, paid time off, and social security, further increasing their vulnerability. India lags far behind other nations in this regard.

Lack of consistent revision:

• Minimum wage rates in India are frequently not updated on a regular basis, which might cause them to become stale and insufficient over time.

Minimum Wage: A way ahead

Increase penalties for non-compliance:

• Improved monitoring of wage payments, and increased labour union and civil society involvement are all necessary for stronger enforcement measures to be put in place to guarantee that workers are paid the minimum wage.

Increase coverage:

• In order to guarantee that minimum wage rules protect all workers, efforts must be made to increase coverage to all industries and forms of employment, including gig and informal workers.
• Currently, the minimum wage varies by state, so India should create a centralised minimum pay scale to ensure compliance and provide coverage and benefits for many workers.

Increase Transparency:

• To guarantee that minimum pay rates are adequate and fair, stakeholders including labour unions, employers, and civil society organisations should be included in a transparent process that determines minimum wage rates.
• To ensure that they receive the minimum wage, workers need also be made aware of their rights.

Regular Revision:

• Minimum pay rates should be adjusted on a regular basis to account for variables like inflation, cost of living, and productivity.
• This will help to guarantee that minimum wage rates are adequate and relevant.

Enhance benefits and protections:

• In addition to ensuring that workers receive the minimum pay rates, actions must be taken to ensure that they receive adequate benefits and protections, such as social security, paid time off, and health insurance.