Economic Survey And Minimum Wage In India: A Quick Look

The Economic Survey 2019 is being tabled in the parliament today by India’s Chief Economic Advisor KV Subramanian. The Economic Survey threw light on all the issues from economic slowdown to GDP growth rate, from minimum wage to Swachh Bharat Mission. 

However, the survey’s main focus continued to be the topic of minimum wage in India. What is it all about and why is the Economic Survey talking so much about it? Let’s take a look 

Minimum Wage In India

1. The chapter completely dedicated to a minimum wage in India is titled as Redesigning a Minimum Wage System in India for Inclusive Growth.The chapter opens up with how the system of minimum wage was prevalent in India since ancient time. And to corroborate the above fact, it highlighted that, the famous Indian treatise from 2nd Century BCE, Arthashastra, ordained “the lowest wages for state employees was 60 panas per year for unskilled workers such as servants, guards, valets, palanquin bearers, and labourers.”

2. Similarly, the minimum wages for agricultural labourers, watchmen, cowherds and other unskilled workers in the private sector was effectively set at 60 panas a year1 (Chapter-3, Book V:"The Conduct of Courtiers"). Similarly, the Code of Hammurabi, which is often cited as the oldest written laws on record, mentions minimum wages: “If a man hires a workman, then from the beginning of the year until the fifth month he shall give six grains of silver per diem From the sixth month until the end of the year he shall give five grains of silver per diem.”

3. In this chapter there were multiple complexities with the minimum wage were mentioned. One was related to the coverage, second is a lack of uniform criteria for fixing the minimum wage rate, the third set of complexities arises from the fact that Minimum Wages Act does not cover all wage workers.

4. Today, there are nearly 429 scheduled employments and 1,915 scheduled job categories for unskilled workers.

5. As mentioned minimum wage does not cover all wage workers and some major vulnerable categories – such as domestic workers – are presently covered only in only 18 States and Union Territories.

6. This time in economic survey under the chapter of minimum wages, also highlighted the gender bias running parallel to it and said that Minimum Wages Act does not discriminate between women and men, but an analysis of minimum wages for different occupations shows persistence of systematic bias

7. For showing gender bias running parallel to minimum wage act the economic survey quoted an example that the women dominate in the category of domestic workers while men dominate in the category of security guards.  While both these occupations fall within the category of unskilled workers, the minimum wage rate for domestic workers (women) within a state is consistently lower than that for the minimum wage rates for security guards (men). Furthermore, the differences in their minimum wage rates are quite large with the minimum wage rates for security guards

8. Despite the increase in minimum wage in India since 1993, the existing   wage inequality measured by the Gini coefficient remains very high by international standards. The Gini coefficient is a commonly used measure of income inequality that condenses the entire income distribution for country into a single numbers between the higher the numbers, the greater the degree of income inequality.