The Centre is planning to enforce region-wise floor wage rates instead of a national base rate, aiming to strike a balance between worker welfare and industry concerns when determining the rates.

Section 9 of the recently notified Code on Wages empowers the Centre to fix floor wages by "taking into account minimum living standards of a worker". The law allows separate floor wages for different geographical areas.

Before consolidating four existing wage laws into the Code on Wages, the Centre had set up an expert committee under labour economist Anoop Satpathy in 2019 to determine a methodology for fixing a national minimum wage.

The committee studied the expenditure of a worker on balanced food, clothing, fuel and light, house rent, education, medical treatment, footwear and transport and proposed ₹375 per day as the minimum wage as of July 2018 price index. It had also suggested a region-wise minimum wage.

However, the government rejected these recommendations following objections from the industry, which felt the wage formula favoured the workers.

Now, the ministry of labour and employment will have to notify floor wages under the new wage code. A government source said a single national floor wage might not be the ideal option as the economic situation and spread of industry varied from region to region.

"If one floor wage is fixed, states such as Bihar and Uttar Pradesh may stay behind in industrialisation because industry will not find it viable to afford higher wages in these states, where the prevailing wage may be less. That is why every region should have its own floor wage depending on the economic and industry situation," the source said.

The source said the government would set up a central advisory board and fix the wage rates based on its advice.

"The wage should not be too high to disrupt the industry. We have to balance the employment scenario and workers' welfare," the source said.

The Centre used to notify a non-statutory national floor-level minimum wage every two years. It was last notified in 2017 at ₹176 a day. At present, there is no reference wage rate at the national level.

Family definition

Experts often calculate the consumption expenditure of a family with one employed member to arrive at the minimum wage.

Since 1957, the government has been considering family as an entity consisting of parents and two growing children, accounting for three units. The man in the family is considered one unit while the woman member is allotted 0.8 weightage point and each child is given 0.6 weightage point.

RSS-affiliated labour union Bharatiya Mazdoor Sangh (BMS) has demanded that the definition of family be amended to include elderly parents.

BMS north zone secretary Pawan Kumar said the two children and the woman member should be considered one unit.

“In 1957, food consumption was the main criterion and since the food intake of the male member is more than others, he was considered one unit. These days, this consideration is obsolete because expenditure has diversified and increased in non-food components such as medicine, education and communication. That is why the definition of family should change,” Kumar said.

He said the minimum wage was notified by the state governments under the Minimum Wage Act, 1948. However, there is a huge difference in the minimum wage in states.

He said the minimum wage of Delhi is ₹18,068 a month, while it is ₹1,12,764 in Haryana and ₹7,400 in Rajasthan.

"The distance between Nimrana in Rajasthan and New Delhi is around 100km, but the minimum wage in Nimrana is less than half of Delhi. If region-wise floor wage is notified, such a huge variation in wage rate will be corrected," Kumar said.