While addressing a Kisan Abhaar Sammelan in January 2019, Congress President Rahul Gandhi made a commitment that if his party is voted to power, his government would implement the minimum wage guarantee for every poor person. The Centre had also introduced a Minimum Wages Bill in Parliament in August 2017.

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Lead taken by Delhi government

New Delhi government took a lead on minimum wage. According to slabs prepared by the Delhi government’s Labour Department, an unskilled worker would be entitled to Rs 14,842 per month, a semi-skilled worker would get Rs 16,341 per month and a skilled worker Rs 17,991 per month. Their wages are currently at Rs 9,724 (unskilled), Rs 10,764 (semi-skilled) and Rs 11,830 (skilled) per month.

In 2016, Delhi government prepared a bill and sent to the Centre. In August 2017, the Delhi government’s recommendations were accepted, however, the Delhi High Court turned down this proposal saying it went against Article 14 of the Constitution, as well as Section 3 & Section 5(2) of the Minimum Wages Act, 1948. The Supreme Court later reversed this decision.

Relevance of Minimum Wages

No one can argue on the income disparity in India, and the improvements needed in the condition of India’s labour force. If not implemented in a proper manner, the case of Minimum Wages would be no different.

Possible Disruptions?

According to The Mint, a 10 percent rise in minimum wage is accompanied by a 5 percent drop in recruitment in low wage hiring firms. In Karnataka, the Minimum Wage has been increased by 80 percent (it has been estimated that over 20,000 jobs could be lost because of this). A number of apparel factories have already shifted from New Delhi to other NCR locations (Noida, Gurgaon) as a consequence of the Delhi government’s decision. The BPO sector too would suffer in Delhi. Unemployment is a major problem pan India and Delhi is no exception, thus it is important to think twice before raising the minimum wage all of a sudden so drastically.

Also, consumers could suffer if minimum wages are raised drastically. The impact of the minimum wage could, for instance, have a major impact on sectors such as healthcare. It would be pertinent to mention that in August 2018, private hospitals and nursing homes had opposed, in Delhi High Court, the Delhi government’s recommendation of raising the minimum wage of nurses to Rs 20,000 per month. They had argued this would make their business unviable.

Conclusion

The idea of minimum wage must be well thought out and done in an incremental manner. It is important that industrialists be made stakeholders in this exercise and their views are taken into account. In principle, there is nothing wrong with the concept, a lot, however, will depend upon its implementation and building consensus.

Tridivesh Singh Maini is policy analyst at The Jindal School of International Affairs, OP Jindal Global University in Sonipat.