Cites fall in global and domestic demand that impacted Indian manufacturers
The labour ministry has put on hold a proposal to increase minimum wages for all by up to 25% for the time being because of a fall in both global and domestic demand that impacted Indian manufacturers.
A senior labour ministry official told ET that the time is not ripe to enhance wages and make it binding on all states as this would raise the input cost for manufacturers and make them uncompetitive.
“We are holding back the increase in minimum wages for a while now and may reconsider this at a later stage when demand picks up so that the additional burden incurred by manufacturers through higher wages is compensated by increase in order inflow,“ the official said on condition of anonymity.
The central government is projecting lower cost of labour in India vis-Ã -vis China, where wages are on the rise, as a major attraction for manu facturers to set up shops in the country along with its focus on the ease of doing business.
“This kind of substantial hike in labour wages will go against the government's approach to `Make in India' and could impact investment decisions as of now,“ an industry expert said, requesting not to be iden tified.
As part of its proposal to enhance mi nimum wa ges, conceived by labour mi nistry last ye ar, all states and union tere grouped into ritories were grouped into three categories based on per capita income and minimum wages for the unskilled, semiskilled and skilled workers in each of the provinces.
Based on the formula arrived at, states like Goa, Delhi, Sikkim, Chandigarh, Pondicherry and Maharashtra, with highest per capita income in the country, would be in the first category where mini mum wage for the unskilled would be in the range of . 8,000-9,000 per month.` For states like Bihar, Uttar Pradesh, Manipur, Assam and Jharkhand, with least per capita income, the minimum wage could be around Rs. 6,000 a month, a hike of 25% based on recently raised National Floor Level Minimum Wage.
Going by this, minimum wages would range between Rs. 9,000 and Rs.12,000 for semiskilled and skilled workers in poor states & between Rs.12,000 and Rs. 16,000 in rich states.
Trade union leaders said higher wages are essential. “Naturally , employers' side will be hurt by increase in wage cost, but this is essential as wages in India are the lowest and unless the worker is compensated well he would not be motivated to deliver to his best ability ,“ said DL Sachdeva of the All India Trade Union Congress.
The National Floor Level Minimum Wage was revised last year to Rs.160 a day from Rs.137.This ranslated into a monthly salary of Rs. 4,800 for an unskilled worker, but is not mandatory for states to follow.
The Economic Times New Delhi,07th July 2016
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