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CII, FICCI to seek a pause on wage code

Topics Covered: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.

CII, FICCI to seek a pause on wage code:


Context:

Representatives of industry bodies, including those from CII and FICCI, have requested the Labour Ministry to hold back implementation of new definition of wages, which would increase social security deductions and reduce the take-home pay of workers.

Need for:

The new definition of wages is part of the Code on Wages, 2019 passed by Parliament last year.

  • The new definition would result in a major cut in take-home salaries and also place a burden on employers.

About the Code on Wages Act:

The code will amalgamate the Payment of Wages Act, 1936, the Minimum Wages Act, 1948, the Payment of Bonus Act, 1965, and the Equal Remuneration Act, 1976.

  1. The wage code universalises the provisions of minimum wages and timely payment of wages to all employees, irrespective of the sector and wage ceiling.
  2. It ensures the “right to sustenance” for every worker and intends to increase the legislative protection of minimum wage from existing about 40% to 100% workforce.
  3. It also introduces the concept of statutory floor wage which will be computed based on minimum living conditions and extended qualitative living conditions across the country for all workers.
  4. While fixing the minimum rate of wages, the central government shall divide the concerned geographical area into three categories – metropolitan area, non-metropolitan area and the rural area.
  5. Wages include salary, allowance, or any other component expressed in monetary terms. This does not include bonus payable to employees or any travelling allowance, among others.
  6. The minimum wages decided by the central or state governments must be higher than the floor wage.
  7. Payment of wages: Wages will be paid in (i) coins, (ii) currency notes, (iii) by cheque, (iv) by crediting to the bank account, or (v) through electronic mode.  The wage period will be fixed by the employer as either: (i) daily, (ii) weekly, (iii) fortnightly, or (iv) monthly.

Advisory boards:

The central and state governments will constitute advisory boards.

  • The Central Advisory Board will consist of: (i) employers, (ii) employees (in equal number as employers), (iii) independent persons, and (iv) five representatives of state governments.
  • State Advisory Boards will consist of employers, employees, and independent persons. Further, one-third of the total members on both the central and state Boards will be women.  The Boards will advise the respective governments on various issues including: (i) fixation of minimum wages, and (ii) increasing employment opportunities for women.

InstaLinks:

Prelims Link:

  1. Composition and functions of the Central Advisory Board established under Code on wages act.
  2. What is a floor wage and who sets it?
  3. Who decides the minimum wages?
  4. What constitutes wages under the act?
  5. Criteria for determination of minimum wages.

Mains Link:

Write a note on code on wages Act, 2019.

Sources: the Hindu.