The recently notified Code on Wages, which introduces a national floor wage to reduce minimum-wage disparity in states, may fail to achieve its objective because of the lack of a timeline for base-wage revision by the Centre, some labour economists said.

The wage code empowers the Centre to notify a floor wage or region-specific floor wages. The minimum wage fixed by states cannot be less than the floor wage.

However, the code is silent on the timeline for revision of the national floor wage rate, while mandating the states to revise the minimum wage every five years.

Under the Minimum Wage Act, 1948, states were required to revise their minimum wage every five years, but several states continued to violate it. As a result, the minimum wage for unskilled labour is around ₹200 a day in states such as Rajasthan, Arunachal Pradesh, Bengal and Assam compared with ₹600 in Delhi and ₹500 in Kerala and Odisha.

The wage code’s silence on the revision timeline would defeat the purpose of having a floor wage, said a labour economist and an expert on wages.

“In the absence of a time limit for the floor-wage revision, the central government can continue delaying the process. This will result in the floor wage remaining low. The states usually delay the revision of minimum wage. If the floor wage is revised on a periodic basis, the states will be forced to revise their minimum wage since it cannot be allowed to remain less than the floor wage. A delay by the Centre will lead to an erratic revision in minimum wage by the states, causing disparity,” said the labour economist, who did not wish to be identified.

Economist Sunil Ray, former director of A.N. Sinha Institute in Patna, said conceptually, employers should not pay workers less than the minimum wage.

“However, the wage and other welfare provisions are being handed over to the big corporations. This government has introduced the concept of floor wage, making it the legally allowed base-level wage. The floor is allowed to always remain below the minimum wage, which means the minimum wage is irrelevant now. What is the benefit of it?” Ray said.

Ray said the market was expected to play a greater role in determining the floor wage rate.

“The economy is actually passing through a critical phase as investments remain low. The government is desperate to attract investments. Through these labour codes offering flexible labour regimes, the government is interested in getting big corporations to invest in India. The wage determination will also favour these corporate houses,” Ray said.

He said the collective bargaining powers of workers had been weakened by the four labour codes.