A well-designed and effective implementation of minimum wages will strengthen the trend towards decreasing wage inequality, especially at lower levels.
The Economic Survey 2019 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.
The policy recommendations for an effective design of minimum wages system as per the Economic Survey are as follows:
- Simplification and Rationalisation: The survey proposes rationalisation of minimum wages as proposed under the Code on Wages Bill. 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 survey also suggests subsuming the 12 different definitions of wages in different Labour Acts into a single definition.
- Setting a National Floor Level Minimum Wage: The survey suggests 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”. The aim would be to make all states almost equally attractive from the point of view of labour cost for investment and reduce distress migration.
- Criteria for setting minimum wage: The economic survey suggests the Code on Wages Bill should consider fixing minimum wages based on either skill or geographical region or both.
- Coverage: The survey also states the minimum wages should extend to workers in all sectors and cover the unorganised sector as well.
- Regular Adjustment and Role of Technology: The survey suggests setting up a mechanism to adjust minimum wages regularly and more frequently. A national level dashboard may be created at the Centre with access to state governments whereby the states can regularly update notifications regarding minimum wages. This portal must be made available at Common Service Centres (CSCs) and rural haats so that the workers are well informed about their bargaining skills and decision-making power is strengthened.
- Grievance Redressal: The Survey suggests setting up a toll-free number to register grievance on non-payment of the statutory minimum wages This would provide low-paid workers a forum to voice their grievance.India Union Budget 2019: What does Finance Minister Nirmala Sitharaman have up her sleeve? Click here for top and latest Budget news, views and analyses.
