Minimum Wage System in India – Economic Survey calls for Redesigning a Minimum Wage System

Minimum Wage System in India – Economic Survey calls for Redesigning a Minimum Wage System

Economic Survey calls for Redesigning a Minimum Wage System in India for Inclusive Growth

Press Information Bureau
Government of India
Ministry of Finance

04-July-2019 12:05 IST

Economic Survey calls for Redesigning a Minimum Wage System in India for Inclusive Growth

Suggests Policy recommendations for an effective design of Minimum Wage System A well-designed and effective implementation of minimum wages will help decrease wage inequality A Mechanism should be developed to adjust minimum wages regularly and more frequently.

A National level dashboard can be set up under the Ministry of Labour & Employment with access to the State Governments Establishing a Toll-free number recommended to register grievances on non-payment of the statutory minimum wages

A well-designed and effective implementation of minimum wages will strengthen the trend towards decreasing wage inequality especially at lower levels.

This becomes all the more significant as women constitute the majority of the bottom rungs of the wage distribution.

This was the stated in the Economic Survey 2018-19 presented by the Union Minister for Finance and Corporate Affairs, Smt. Nirmala Sitharaman in Parliament today.

The Economic Survey 2018-19 states that an effective minimum wage policy that targets the vulnerable bottom rung of wage earners can help in driving up aggregate demand and building and strengthening the middle class, and thus spur a phase of sustainable and inclusive growth.

Following are the Policy recommendations for an effective design of minimum wages system as per the Economic Survey 2018-19:

Simplification and Rationalisation: Rationalisation of minimum wages as proposed under the Code on Wages Bill needs to be supported.

This code amalgamates the Minimum Wages Act, 1948, the Payment of Wages Act, 1936, the Payment of Bonus Act, 1965 and the Equal Remuneration Act, 1976 into a single piece of legislation.

The definition of ‘wage’ in the new legislation should subsume the present situation of 12 different definitions of wages in different Labour Acts.

Setting a National Floor Level Minimum Wage: Central Government should notify a “national floor minimum wage” that can vary broadly across five geographical regions. Thereafter, states can fix their minimum wages at levels not lower than the “floor wage”.

This would bring some uniformity in minimum wages across country and would make all states almost equally attractive from the point of view of labour cost for investment as well as reduce distress migration.

Source: PIB