On 26 July 2017, PM Narendra Modi led Cabinet approved new minimum wage code bill. This wage code bill will ensure min. wage across all sectors with the help of 4 labour relates laws.
This new minimum wage code bill will likely be beneficial for more than 4 crore employees in India. If Parliament passes the bill, the new law will affect competitiveness of industry and also the ability of states to attract investment.
As GST is applied from July 1, it has already reduced the ability to offer VAT sops. Still states’ clearance is not considered. This will surely impress trade unions and the currently employed. If implemented faithfully across the country, it will add to the series of disadvantages Indian firms face and ensure more of them remain in the informal sector where policing wages is that much more difficult.
As per latest Economic survey, 78% Indian firms employ under 50 workers and 10% employ more than 500.
Former chief statistician of India, Pronab Sen said, “States are expected to take into account local conditions including local cost of living and availability of skills and also the need to attract investment. All of these go together. So, when the Centre imposes a common minimum wage, you are taking away a very valuable policymaking tool of states,”
Brazil implemented similar minimum wage bill earlier and they suffered regional income disparities. After that recently Brazil Senate approved some changes to their labour code.
The Labour Code on Wages, 2015, will empower the central government to notify a “national minimum wage” and this will be revised every 2 years. As on now Indian labour laws are very restrictive. If this bill passes it will only make more difficult for companies.
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