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Finance & Innovation

India Passes 'Historic' Minimum Wage Law

By Roli Srivastava

MUMBAI, India, Aug 2 (Thomson Reuters Foundation) — India's parliament on Friday passed a "historic" law to guarantee a minimum wage to hundreds of millions of workers, but labor activists said it did not go far enough to protect those in the informal sector.

The Code on Wages aims to set standard wages across India, where almost 90% of the labor force works in the informal sector with no security, low pay, and little or no benefits.

Labor minister Santosh Gangwar said the "historic" bill would for the first time ensure about 500 million Indian workers received minimum pay. Previously, 1 in 3 casual workers on daily wages had been excluded, according to official data.

"This will be the first time that all workers who earn daily wages and employed across all sectors will have the right to a minimum wage," a labor ministry official told the Thomson Reuters Foundation, speaking on condition of anonymity.

India's minimum wage is 176 Indian rupees ($3) for an eight-hour work day, but local authorities can set their own lower rate and at least six states do so.

Read More: Australia’s Lowest-Paid Workers Are Set to Receive a 3% Wage Lift

India's upper house passed the Code on Wages Bill, the first of four labor bills designed to replace 44 archaic laws, on Friday evening within three days of it being voted through the lower house.

Speaking in parliament, opposition lawmakers said the bill lacked teeth and failed to guarantee "fair wages" to workers.

"After so many years, our government is still talking about minimum wages and not fair wage. We have missed the opportunity to improve lives of millions of people living in sub-human conditions," said parliamentarian Madhusudan Mistry.

Labor activists said many workers would remain vulnerable to exploitation, particularly those hired through contractors, which is often the case for brick kilns and tea plantations.

Read More: More People Than Ever Before Are at Risk From Slavery in the UK

Opposition politicians criticized a provision allowing employers to make deductions for staff benefits such as housing, food and travel payments, a practice that has for decades driven workers into debt bondage.

"India is legitimizing modern-day slavery. The struggle for bonded labor just got more difficult," said Chandan Kumar, coordinator of labor rights organization Working People's Charter.

(Reporting by Roli Srivastava; Editing by Claire Cozens. Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers humanitarian news, women's and LGBT+ rights, human trafficking, property rights and climate change. Visit http://news.trust.org)