In the face of increasing criticism and negative public perception over the plight of migrant labourers, the Centre is now pushing for a more wholesome assessment of minimum wage for workers.
The Government of India has issued a gazette notification for draft rules for the ‘Code of Wages’ law which is expected to benefit 50 crore workers across the country. After presenting the rules in the form of a gazette notification on Tuesday, the Centre has invited suggestions that will be considered before a final draft is accepted.
These rules come a year after Parliament had passed the Code on Wages Bill, allowing the Centre to set a minimum statutory wage. Minimum wage rules do not just incorporate livelihood but also well being, said the government. It had added that the power to fix minimum wages will stay with the Central and state governments.
First in a series of four labour codes proposed as part of the Centre’s labour reform initiative, the minimum wage law asserted that the government would fix a minimum wage on the basis of geography and skills.
The draft rules notification also comes in the wake of severe criticism faced by multiple states over their decisions to dilute laws governing labour welfare as part of an attempt to restart economic activity post the nationwide lockdown to contain novel coronavirus.
Occupations included in draft
A total of 123 occupations have been included in the Centre’s latest notification under the unskilled category/ These include loader/unloader, woodcutter, office boy, cleaner, gateman, sweeper, attendants, beldar etc.
The semi-skilled category has 127 occupations, including butler/cook, khalasi, masalchi, washerman, and sweeper.
Meanwhile, the skilled category comprises 320 types of occupations, including munshi, typist, bookkeeper, librarian, Hindi translator, and data entry operator among others.
There is also a highly skilled category which has 111 types of occupations, including armed security guards, head mechanics, compounders, blacksmiths, etc.
In a considerable departure from the past, the draft rules propose that every employer has to issue wage slips, electronically or physically, to the employees. This would add to transparency and reduce harassment of workers.
Formula for fixing minimum wages
The draft rules propose a method for calculating minimum rate of wages on a daily basis using the following criteria.
- Standard working-class family which includes a spouse and two children apart from the earning worker; an equivalent of three adult consumption units
- A net intake of 2,700 calories per day per consumption unit
- 66 metres cloth per year per standard working-class family
- Housing rent expenditure to constitute 10 per cent of food and clothing expenditure
- Fuel, electricity and other miscellaneous items of expenditure to constitute 20 per cent of minimum wage
- Expenditure on children’s education, medical requirement, recreation and expenditure on contingencies
Criteria for working hours
Draft rules notified by the Government of India propose that a normal working day would consist of eight hours. Workers will be entitled to one or more rest intervals. The rider is that intervals should not exceed a total of 60 minutes.
This formula also proposes one days’ rest in a week. Ordinarily, the day of rest can be Sunday but the employer would get the right to change it to some other day depending on local factors and needs. In case any shift assigned to a worker extends beyond midnight, the worker has to be compensated with a whole days’ rest which qualifies as a 24-hour break between the end of the previous shift and the beginning of the next shift.
A daily and hourly wage benchmark is to be decided on the basis of the mentioned factors.
Monthly wages will be decided by dividing a day’s wage by eight hours and multiplying the daily wage with 26 (days). In such calculations, factors of one-half and more than one-half shall be rounded as the next figure and factors less than one-half shall be ignored.
This would also mean that a worker’s month will have 26 working days.
Geography, skills as basis for wages
To fix wages, the concerned geographical area will be divided into three categories- metropolitan area, non-metropolitan area and rural area.
To incorporate the skill of a worker, the draft proposes a technical committee constituted by the Central Government.
Chief Labour Commissioner (Central) will be appointed as the Chairperson of this committee. Other members will include the Joint Secretary to the Government of India in the Ministry of Labour and Employment dealing with wages, a representative from the Ministry of Skill Development, Director General of Employment in the Ministry of Labour and Employment, along with four others including two technical experts nominated by the Central Government.
On the advice of the committee, the Central Government shall fix occupations of employees into four categories- unskilled, semi-skilled, skilled and highly skilled.
The committee will also take into account, to a possible extent, national classification of occupation or national skills qualification framework or other similar frameworks, for the time being, formulated to identify occupations.
Dearness allowance for daily wagers
Rules have also been framed for time intervals for revision of dearness allowance.
The gazette says, “Endeavour shall be made so that the cost of living allowance and the cash value of the concession in respect of essential commodities at concession rate shall be computed once before 1st April and then before 1st October in every year to revise the dearness allowance payable to the employees on the minimum wages.”
At present, the Government of India carries revises the Dearness Allowance twice a year for its employees and officers. The first tranche is effective from January 1, and the second from July 1.
DA will be payable on a worker’s minimum wages. This allowance helps wage earners retain more cash in hand to make up for an increase in prices of various commodities.
Longer wage period
Longer wage period for the purpose of calculation of minimum rate of wages shall be by the month, the notification adds.
Floor wages will be fixed by taking into account minimum living standards including food, clothing, housing and any other factors decided by the Central Government from time to time regarding a standard working-class family as specified in the clause.
Since wages are to be decided by the state, the centre is mandated to consult state governments as it deems necessary before fixing the floor wage.
To empower workers, the Centre has proposed that an employer who plans to make any deduction in the wage of a worker shall make intimation of a deduction to the concerned Inspector-cum-Facilitator within 10 days from the date of deduction with the reason for the deduction.
Unions to submit collective response
Labour unions are studying the draft notification. They plan to make a common paper instead of separate submissions to maintain high unity index that could benefit workers.
However, union leaders say that there are several factors that would eventually decide whether minimum wages in the country would witness a meaningful hike.
They say that in 2016, there was a proposal to raise the bar to Rs 375 per day but unions had argued that it should be Rs 660 instead.
A lot will also depend on what cut-off period is used as the benchmark for price inflation. If the benchmark is not recent, wages will not really go up, unions asserted.