What is the News?
The Union Labour Ministry has revised the Wage Rate Index by setting the new base year at 2016 which will replace the old series with base of 1963-65.
What is the Wage Rate Index?
Wage Rate Index is a vital economic indicator that measures changes in the wage level in selected industries.
Released by: Labour Bureau, an attached office of the Ministry of Labour & Employment.
What are the changes made to the wage rate index?
Source: Livemint
Change in Base year: The base year has been changed from 1963-65 to 2016.
Half Year Basis: The new WRI will now be compiled on a half-year basis (on the first of January and July every year) as against the annual in the existing series.
Basket of Goods: The previous series covered 21 industries. But the new one covers 37 including 30 from the manufacturing sector and three each from the mining and plantation sectors.
What is the significance of the changes in the Wage Rate Index?
The government periodically revises the base year for major economic indicators to reflect the changes in the economy and to capture the wage pattern of workers.
Hence, the revised base will be more representative and play a critical role in determining the minimum wages and national floor wages, along with other parameters.
Moreover, companies can use the data to finalize corporate strategies by comprehending the likely expenditure on employee compensation, consequent per unit cost, marketing strategy, and assessing the viability of the business.
Source: This post is based on the article “What the new wage rate index series means for salaries” published in Livemint On 1st Dec 2021.
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