The Dilemma of Minimum Wages

Package for Urban Labour Needed

B Sivaraman

Four major current developments have brought some labour concerns into the spotlight, some of which are expected to figure as election issues as well.

First, the release of Congress poll manifesto, the main highlight of which is the Nyay, the minimum income guarantee of Rs 72,000 per year or Rs 6000 per month. While offering some solace to the very poor, will it also act inadvertently as an income dampener as the Congress party has not spelt out its stand on the demand of the trade unions for a minimum wage of Rs 18,000 per month? There are teething problems of practical implementation of Nyay as well. For instance, will it translate into transfer of Rs 6000 per month from the state uniformly for all the undefined very poor beneficiaries supposed to comprise 5% of the population irrespective of their current earnings?

If that happens, it would be a game-changer, be it in increasing the per capita income or eliminating poverty and malnutrition or even in giving political dividends to the Congress. But if it is going to be adjusted with the prevailing wages, only a small section of the low wage earners not getting even Rs 6000 per month presently is going to be benefited fully. In that case, how would they still arrive at this adjustment? Congress has not made it clear.

In any case, what is the point in announcing an income guarantee, that too covering the entire household and not the individual, which is pegged at one-third the minimum wage meant for an individual worker? This is not only a demand of the TUs but this much or more is actually being paid in Kerala, Tamil Nadu, Pondicherry and Goa etc, in some industries? Anyway, the Congress promise is a good income guarantee for paupers no doubt!

The second important development is the release of the State of Working India 2019 report by the Centre for Sustainable Employment (CSE) of the Azim Premji University which proposes an employment guarantee scheme for urban workers in small towns. But going by the experience of the MGNREGA for rural workers, there are no takers for NREGA work in some States like Kerala and parts of Tamil Nadu etc., because of the low NREGA wages pegged in parity with the State minimum wages which are far below the prevailing market wages and more so because of undue delay in payment of wages stretching even upto six months.

So, after marshalling powerful arguments as the rationale for an urban employment guarantee scheme, the report summarises the prevailing wage rates in urban India for three categories of workers based on CMIE Consumer Pyramids Survey. According to these data, median earnings reported by casual wage labourers in urban India in 2018 were Rs 9625 per month or Rs 370 per day assuming a 26-day working month. Self-employed informal entrepreneurs reported median monthly earnings of Rs 12,500 or Rs 480 per day while white-collar clerical workers reported median earnings of Rs 28,125 per month or Rs 1082 per day.

After taking these prevailing median wage rates into account, the Azim Premji University report proposes 150 days of work for an estimated 5.9 crore informal workers in small towns in 2 categories: a general category of unskilled work at Rs 500 wage per day and Rs 13,000 per month for a second category of 150 days of skill development training as apprentices in a year. But the report doesn't say anything about hiking the floor minimum wages to Rs 18,000 and introducing strong legal guarantees for their enforcement and periodical revision. Why is it so? When asked about this, Prof Amit Basole, Chief of CSE, clarified that they came up with a compromise figure of Rs 500 as the total fiscal bill for this itself would come to Rs 2.8 lakh crore or 1.7% of the GDP which he said would be fiscally sustainable and would lift up the income level of a majority of the urban informal workers.

The third important development is the release of the report of the expert committee on minimum wages formed by the Ministry of Labour and Employment which recommends hiking the "floor minimum wage" from the present Rs 4576 to Rs 9750 plus an additional house rent allowance of Rs 1430 a month. This is ridiculous as, to cite a few examples, the basic minimum wage in Kerala is Rs 18,000 per month in all occupations and it is fixed at Rs 20,000 for nurses and the sanitation workers in Bangalore get a minimum wage of Rs 14,040. These are statutorily fixed minimum wages and in many cases the market wages are much higher. No wonder, all major trade unions have condemned this recommendation of the experts' committee.

The fourth important development is the scheduled release of a People's Agenda by the name Jan Sarokar (People's Concerns) on 6 April 2019 by around 200 NGOs which they call People's Manifesto for the elections. Sources indicate that they are also contemplating inclusion of higher minimum wage and employment guarantee in urban areas too.

The UN Urban Population Prospects 2018 report puts the present Indian urban population at 34% and it is expected to cross 40% by next elections in 2024 and half the India is estimated to be urban by 2029. As per ILO figures, 81% of the workers in India are in the informal sector now and they are equally divided between urban and rural areas. It is a paradox that the incidence of urban poverty in 2011-12 was 13.6% but the share of the slum population is increasing. So what is needed for urban informal workers is an integral package including Right to Housing and affordable houses for the poor, subsidies for education even in private educational institutions of one's choice, extension of Ayushman Bharat kind of health insurance but with universal coverage and subsidies for informal workers in urban public transport besides an increase in minimum wage. One can only hope that the fragmentary proposals being raised now would evolve over time into such an integral package.

Vol. 51, No. 44, May 5 - 11, 2019