Speculations have recently arisen with regard to the Government of India considering overhauling the minimum wage system in the country to a living wage framework by 2025. The inference comes forth from the International Labour Organisation, an organisation India is a founding member of, publishing the agreed definition of what a living wage constitutes. Owing to the deliberations of a meeting of experts on wage policies in February this year the organisation denotes a living wage as one calculated according to the performance of duties during normal hours of work, set as per the circumstances of a country, thereby allowing for a decent standard of living for workers and their families. Calculation of the wages is further recommended to depend on the principles of the organisation on estimating living wages, carried out via a wage setting process developed around the principles of estimation worked on by the organisation. The consideration of such a living wage factoring in the regional differences within a country finds its parallels in legislation currently under consideration within India. Furthermore, a report published earlier this year by the International Labour Organisation states a rise by a factor of at least 40% in real wages in the country, along with initiatives to test a new minimum wage system based on the cost of living and evaluation of the present minimum wage framework in India and countries such as Costa Rica, Ethiopia and Vietnam.

Present regulations of determining the minimum wage has policies formed around the subject in the form of the Minimum Wages Act of 1948, along with the Codes of Wages Act of 2019, with the latter yet to be implemented.The delay in implementation of the Code is reported to be so owing to the onset of the pandemic at the time. 

With regard to minimum wages as per the Minimum Wages Act of 1948 pertaining to the private sector, a written reply by the Minister of Labour and Employment to the Lok Sabha states that provisions of the 1948 Act now being subsumed under the 2019 Code makes minimum wages applicable across all forms of employment, as opposed to the scheduled ones mentioned under the Wages Act of 1948. The Minister further mentioned a periodically revisited cost of allowance set above the basic wages implemented at present, with the same being published most recently in April of 2024 by the office of the Chief Labour Officer as the Variable Dearness Allowance. It is pertinent to mention however, that modes of employment the wage rates concern, are those mentioned specifically as so under the Minimum Wages Act of 1948, amended over the years accordingly, and not the Code of Wages Act of 2019, that is yet to be implemented. 

Another subject of relevance regarding the framework of minimum wages in the country pertains to the concept of a National Floor Wage that sets the lowest amount any state government or employer may fix a wage under. The fixing of a National Floor Wage has been in practice since 1996 under the Minimum Wages Act of 1948 when it was set at Rupees 35, after it was recommended by the National Commission on Rural Labour in 1991. The Code if 2019 engages in considerations to have it fixed as per geographical locations determined by the administration, thereby facilitating its possible future development along the lines of a living wage deliberated on by the International Labour Organisation. 

In a 2024 reply to a question posed in the Rajya Sabha regarding considerations of the National Floor Wage being raised to Rupees 375, that were scrapped owing to concerns by industries and being set most recently at Rupees 176 in 2017, was responded to by the Minister of Labour and Empowerment, referring to the National Floor Level Minimum Wages being subsumed within the 2019 Code along with the Act of 1948, with revisions of the policy yet to be implemented owing to the present circumstances regarding the Code.

Norms and principles that outline guidelines of the Minimum Wages Act of 1948 considers recommendations by the 1957 session of the Indian Labour Conference. Revisited in a Gazette Notification announcing the Code of Wages Act of 2019, the notification states the criteria for fixing minimum wage rates as wages set for;-

-the 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 2700 calories per day per consumption unit; 

- 66 meters 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 percent of minimum wage; and

-Expenditure for children education, medical requirement, recreation and expenditure on contingencies to constitute 25 percent of minimum wage

A wage fixed for a day as so is to be divided by 8 for defining the hourly wage of a normal working day and multiplied by 26 for defining the monthly wage. Speculation remains on a clause stating that values of the wage that include halves or more than one-halves within them are to be rounded off to the next figure, with ones that make up less than a one-half to be ignored. 

The concept of a Variable Dearness Allowance as per the 1948 Act aims to protect minimum wages from inflation by periodically setting VDA rates determined via information on retail prices across sectors and products compiled into the Consumer Price Index for Industrial Workers or CPI-IW. The Ministry of Labour and Employment accordingly publishes minimum wage as well as revised Variable Dearness Allowances for the scheduled industries mentioned in the Act on the 1st of every April and October every year. Owing to Code of Wages Act of 2019 not having yet been implemented, the concept of minimum wages in India arguably remains restricted to the industries they are mentioned to be applicable to as so. The National Floor Wage of Rupees 175 per day, however, remains applicable across modes of employment in the country. The National Floor Wage accordingly comes forth as a viable contender for the country’s real national minimum wage, applicable across industries and sectors other than those deliberated on subsequently.

The data published as the April 2024 revision of Variable Dearness Allowances as per the 1948 Act by the Chief Labour Officer states a range of wages across industries without the Variable Dearness Allowance ranging from Rupees 300 for unskilled labour in the agricultural sector in areas designated as ‘C’ up to rupees 2,171 for employees of stone mines engaging in working on breaking and crushing stones racing ranging from the size of 1 to 1.5 inches. The same range along with the Variable Dearness Allowance spans from rupees 449 for unskilled work in area C regions for agriculture to Rupees 3,212 for the stone mine category of 1 to 1.5 inches. 

Considering the practice of determining monthly wages for an employee as per a fixed period of 26 days for every month as per the Gazette notification of 2020, the monthly and yearly salary range that comes forth with respect to the minimum wage range published by the Ministry of Labour and Employment ranges as basic wages and with VDA from Rupees 7,800 and 11,674 to Rupees 56,446 and 83,512 per month. The range translates to Rupees 93,600 and 1,41,168 to Rupees 6,77,352 and 10,02,144 as annual income.

Sectors covered by the notification of the Ministry of Labour and Employment broadly include the agriculture sector, various kinds of mines, maintenance of infrastructure, services in the Railways, public works excluding prohibited activities under the 1993 Manual Scavengers and Construction of Dry Latrines Act, watches and wards, and employees of specific stone mines, with the lattermost posting the uppermost wages of the range as mentioned earlier. Sectors other than the specific stone mines post the highest wage, mostly for highly skilled or Area A work as Rupees 693 and 1028 as basic wages or with VDA. The numbers accordingly translate to Rupees 18,018 and 26,728 for the month, and Rupees 2,16,216 and 3,20,736 for the year. 

A note is to be made at this juncture of a particular role within the specific stone mine sector that posts the lowest minimum wages, not mentioned earlier as an effort to move away from the restrictions on purview imposed by both the lowest and highest wages across sectors existing within the specific stone mine industry. The role pertaining ‘removal and stacking of rejected stones’ states a base wage rate of Rupees 283 and 483 with VDA, Rupees 7358 and 12,636 for the month and Rupees 88,296 and 1,51,632 annually. 

In summary, the minimum wage range across sectors, demarcated regions and skill levels may range from Rupees 88,296 to 6,77,352 as base wages and Rupees 1,51,632 to 10,02,144 with VDA . Wages excluding the specific stone mine industry ranges from Rupees 93,600 to 2,49,480 as basic wages and Rupees 1,41,168 to 3,70,080 with VDA as annual income . The particular range includes employees from roles in unskilled work from Area ‘C’ regions to employees engaging in highly skilled work of Area ‘A’ regions across the aforementioned sectors. 

Overall, the possible annual income range of minimum wage as per the April 2024 notification spans from Rupees 88,296 to 10,02,144 with or without VDA amounting to an average income of Rupees 5,45,220. However, the range excluding the specific stone mine industry would be from Rupees 93,600 to 3,20,736 as per the generalisations considered earlier, amounting to an average income of Rupees 2,07,168. Considering such a scenario of difference in wages owing to the omission of a single sector, it may be noteworthy to mention that while the average annual income may represent the prospects for economic progress across industries and sectors, the median annual income stands as an accurate indicator of half of the country’s working population, particularly from the organised sector, at the least. 

Consideration of the wages both as basic rates and along with VDA has been undertaken as so owing to the concern of effective regulatory implementation regarding the inclusion of Variable Dearness Allowance when employees are remunerated for their work. The levels of skills mentioned on the VDA notifications at present find their mention in the Gazette notification of 2020. Classification of the skills is primarily based around experience and skill in a particular role with varied degrees or responsibility and specialisation being the guiding factor for the distinctions between unskilled, skilled semi-skilled and highly skilled roles. Classification of geographical regions as per the gazette has further been delineated as metropolitan, non-metropolitan and rural areas, one that diverges from the present classification of regions organised as as so as per regions within 3 classifications published in 2017.

The normal working day is accordingly stated to be of 8 hours and one or more intervals of rest that in total is not to exceed one hour. The normal working day is further not to go beyond 12 hours on any given day. The notification further states a mandatory rest day required after 6 days of work. The guidelines, however, do not apply to provisions under the Factories Act of 1948 and shall be changed as required in the case of employment in agriculture. 

Referring to the 4 skill levels mentioned in several VDA notifications at present, levels of skill, namely unskilled, semi-skilled, skilled and highly skilled have historically included a directory of professions, often with list making up roles referred to colloquially as so. The highly skilled level across sectors posted in the gazettes mostly comprise what are referred to Grade 1 employees of the profession, which may or may not refer to those employed by any administration.

As the notification elaborating on the possible procedures of the Code of Wages 2019 is awaited to be implemented, queries remain as to whether or how the wages may translate to occupations of the organised sector, across the levels of skills that may arguably constitute different roles from what they are at present. The advent of new roles to be considered under these levels, information that may also be borrowed from the National Classification of Occupations, makes room for speculation on fair compensation beyond minimum wages and dearness allowances for such other forms of employment, and whether the broader expectation of an income distanced from a minimum wage is justified to begin with. While the 2019 Code of Wages looks to apply to all modes of employment, the legislation is nevertheless likely to assign wages according to levels of occupation and set floor wages as per geographical regions. 

A query consequently arises as to whether the mode of compensation for employees of the different skill levels, particularly in the private sector and distinct from the present constituents of the skill levels and geographical spaces, would be based on the National Floor Level Wage. Subject to market competition, demand for employees and effective adherence to the regulations, the Floor Wage may still emerge as the only legitimate factor in determining acceptable remuneration rates within an industry, across levels of organisation and integration within the formal economy. Considering a possible impact on income distanced from minimum wages another assumption that awaits to be allayed is whether the regularisation of minimum wage would have an impact on better income prospects for roles that demand a relevant degree of specialisation in skills or education, an investment that involves a significant amount of time from an individual and resources from their sponsors to secure. 

And so, an issue of pertinence along with a fairer compensation of employees across sectors owing to the recent developments concerning minimum wages, arises with regard to whether the resources and time invested by such employees for better prospects for themselves and their succeeding generations is to be realised in a favourable manner, or is to be one that leads to fair trade practices that shall not come in the way of legislation and surely guarantee the minimum wage. One may very well come across a prospect free from any such implication in the guise of an industry-standard, placed in elusive proximity to the minimum wage framework likely to be implemented in the near future within the country.