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National Minimum Wage

Topics Covered:

  1. Welfare schemes for vulnerable sections of the population by the Centre and States and the performance of these schemes; mechanisms, laws, institutions and bodies constituted for the protection and betterment of these vulnerable sections.
  2. Inclusive growth and issues arising from it.

 

National Minimum Wage

 

What to study?

  • For Prelims: Highlights of the recommendations and criteria used to determine the National Minimum Wage.
  • For Mains: National Minimum wage-need, significance, challenges and benefits.

 

Context: Expert Committee Submits its Report on Determining Methodology for Fixing National Minimum Wage.

 

Background:

There have been several developments since the norms for the fixation of the minimum wages were recommended by the 15th ILC in 1957 and subsequently strengthened by the judgement of the Supreme Court in the judgement of Workmen v Reptakos Brett & Co. case in 1992.

The Ministry of Labour and Employment had constituted an expert committee in January 2017, under the Chairmanship Dr. Anoop Satpathy to review and recommend methodology for fixation of National Minimum Wage (NMW).

 

Criteria on which the minimum wage has been proposed:

  • Using the nutritional requirement norms as recommended by the Indian Council of Medical Research (ICMR) for Indian population, the report has recommended a balanced diet approach which is culturally palatable for fixation of national minimum wage.
  • Accordingly, it has proposed that food items amounting to the level of ± 10 per cent of 2,400 calories, along with proteins ≥ 50 gm and fats ≥ 30 gm per day per person to constitute a national level balanced food basket.
  • It also proposes minimum wage should include reasonable expenditure on ‘essential non-food items’, such as clothing, fuel and light, house rent, education, medical expenses, footwear and transport, which must be equal to the median class and expenditure on any ‘other non-food items’ be equivalent to the sixth fractile (25-30 per cent) of the household expenditure distribution as per the NSSO-CES 2011/12 survey data.

 

What’s the proposed National Minimum wage?

On the basis of the aforesaid approach, the report has recommended to fix the need based national minimum wage for India at INR 375 per day (or INR 9,750 per month) as of July 2018, irrespective of sectors, skills, occupations and rural-urban locations for a family comprising of 3.6 consumption unit.

It has also recommended to introduce an additional house rent allowance (city compensatory allowance), averaging up to INR 55 per day i.e., INR 1,430 per month for urban workers over and above the NMW.

 

Regional variations:

Apart from proposing the level of a single national minimum wage at an all-India level, the report 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.

For the purpose of estimating national minimum wages at regional levels it has grouped the states into five regions based on a composite index and have recommended region specific national minimum wages as follows:

Way ahead:

The committee has also recommended reviewing the consumption basket every five years, subject to the availability of NSSO-CES data, and – within the period of 5 years – 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.

 

Mains Question: Do you think there should be a law to ensure minimum wages applicable to all employees across that country including sector-specific minimum wages for industrial workers? Substantiate.