The Union Cabinet has cleared the New Code on Wages bill, 2019.
What is the current situation?
At present, minimum wages are fixed on the basis of categories such as Skillset (skilled, unskilled, semi-skilled, high skilled), geographicallocation and nature of work/sector.
At present, there are 2,500 minimum wage rates across the country.
There are 13 categories of work for which minimum wage is fixed.
The minimum wages are fixed by both the State and the Centre.
The Centre can notify the minimum wage rate for railway, agriculture, mining or central government entities.
The current floor wage that was fixed in 2017 is Rs 176/day, but some states have minimum wages lower than it.
What are the changes made?
As per the Bill, minimum wages will be linked only to factors such as skillset and geographical location.
This is expected to reduce the number of minimum wage rates across the country to 300.
The minimum wage law will be extended to all sectors, this move is expected to ensure universal wage protection against exploitation.
National Floor Level Minimum Wage – To be set by the Centre to be revised every five years.
States will fix minimum wages for their regions, which cannot be lower than the floor wage level.
What previous legislations would be replaced?
Payment of Wages Act, 1936
Minimum Wages Act, 1948
Payment of Bonus Act, 1965
Equal Remuneration Act, 1976.
What are the challenges?
The proposed Bill empowers the Centre to fix a statutory minimum wage. But this may differ from state to state or from one geographical area to another.
This idea of a differentiated national minimum wage rate was taken forward by a government-appointed committee.
The committee has suggested a national minimum wage level for five different zones.
Four of these are grouped using varied socio-economic and labour market factors.
The 5th group includes all North-eastern states except Assam.
Despite the grouping, a regional-level minimum wage rate can lead to disparity among various regions with varying economic profiles.
