There are 340 million workers in the unorganised sector in India who are not covered by any social security measures, including the Minimum Wage Act 1948. In order to have a uniform wage structure and to reduce the disparity in minimum wages across the country, a concept of National Floor Level Minimum Wage (NFLMW) was mooted by the Ministry of Labour and Employment, which has been revised at Indian Rs.100 (just over US$2) per day with effect from 1st November 2009. The NFLMW is a non-statutory measure so state governments are persuaded to fix or revise state minimum wage levels to ensure that they are not less than the NFLMW in respect of all scheduled employment, including in agriculture.
The Labour Ministry has proposed changes in the Minimum Wage Act to allow each form of employment – besides those listed by the central and state governments – to be covered by the Act. The amendment, to be introduced in the forthcoming budget session in February 2011, proposes that every worker be paid the higher of the two mechanisms – lowest wage fixed for an unskilled worker or the NFLMW – for “any employment other than that covered in the Schedule” of the Minimum Wage Act. At present, the central and state governments are empowered to notify any job in the Minimum Wage Act Schedule only when the number of employees is 1,000 or more. There are 45 specific forms of employment identified in the central government’s agricultural and non-agricultural lists, while state governments have as many as 1,596 forms of employment on their lists. Under the Act, each state fixes a minimum wage, which is revised at regular intervals.
On average, unorganised sector workers do not earn more than Indian Rs. 50 (just over $1) per day, while the NFLMW is Indian Rs. 100. Among the 340 million workers in this sector in India are home-based workers, employees in household enterprises or small units, agricultural workers, labour on construction sites, domestic work and other forms of casual or temporary employees, including teachers. Around 220 million unorganised workers are found in the agricultural sector.
The measure, if implemented, would reduce poverty levels in some states where the NFLMW is higher than the minimum wage specified by the state governments. However, in other states and for some occupations, the NFLMW paradoxically would be lower than the state statutory minimum wage. Further, the gap between the proposed NFLMW and the statutory state minimum wage level could create unrest between different categories of workers and the proliferation of child labour.
In the state of Rajasthan, for example, the minimum wage is Indian Rs. 135 for unskilled workers and the landless labourers are planning a demonstration demanding the same minimum wage rate and not the NFLMW at Indian Rs. 100. The low NFLMW would not be able to adequately support workers’ families which could lead to children being pulled out of schools and into work to augment family income.
In addition, there is a legal overtone to the NFLMW. According to Indian law, when a person provides labour or service to another for remuneration that is less than the minimum wage, the labour or service provided falls within the meaning of “forced labour”. By interpretation, this means that the implementation of the NFLMW in states where it is less than the statutory minimum wage could mean that the workers are working under conditions of forced labour.
The Global March welcomes the move towards a uniform NFLMW in India, and calls for a real and living wage for the workers, factoring in variations in inflation and the differing costs of living in rural and urban areas. This should also be revised at regular intervals.