[Answered]Discuss the need and significance of Code of wages, 2019. How will it impact the Indian economy?

Demand of the question

Introduction. Contextual Introduction.

Body. Discuss the need and significance of code of wage. Mention its impact on Indian economy.

Conclusion. Way forward.

Codes on Wages, 2019 will codify relevant provisions of four existing laws and intends to increase the legislative protection of minimum wage to the entire workforce. The codification proposes to simplify 32 central labour laws into four codes to bring them in sync with the emerging economic situation, facilitate easier compliance by establishments, promote ease of living and ensure labour welfare and wage and social security for workers. The bill aims to transform the old and obsolete labour laws into more accountable and transparent ones and seeks to pave the way for the introduction of minimum wages and labour reforms in the country.

Need for a national minimum wage:

  1. One argument for a national minimum wage is to ensure a uniform standard of living across the country.
  2. At present, there are differences in minimum wages across states and regions.The introduction of a national minimum wage may help reduce these differences and provide a basic standard of living for all employees across the country.
  3. To streamline the definition of wages as present labour laws consist of 12 different definition of wages which is the major cause of litigation and inefficiency in the implementation of labour laws.
  4. The definition has been simplified and is expected to reduce litigation and will entail at a lesser cost of compliance for an employer.
  5. An establishment will also be benefited as the number of registers, returns, forms, etc., not only can be electronically filed and maintained, but it is envisaged that through rules, not more than one template will be prescribed.

Significance of the code of wage:

  1. Codification of labour laws will remove the multiplicity of definitions and authorities, leading to ease of compliance without compromising wage security and social security to workers.
  2. The new Code on Wages will ensure minimum wages to all and timely payment to employees irrespective of the sector without any wage ceiling.
  3. It is expected to treat contract labour on par with regular employee to have dignified life.
  4. It is expected to provide for an appellate authority between the claim authority and the judicial forum which will lead to speedy, cheaper and efficient redressal of grievances and settlement of claims as that of earlier.
  5. The code is expected to benefit over 50 crores employees across the country.
  6. The code is expected to go for digital mode/cheques as the mode of payment of wages. This would promote digitisation and extend wage and social security to the worker.
  7. Will ensure decent Minimum wage for all which will result into increase in disposable incomes in turn help in eradicating Poverty, hunger to achieve SDGs.
  8. It will ensure humane working conditions through minimum working hours, overtime etc. and prevent exploitation of labour.
  9. The Code prohibits gender discrimination on wage-related matters. It would also help in reduce regionalism by reducing wage disparity across different regions.

Impact on the Indian economy:

  1. It would help to reduce compliance costs for employers and is expected to reduce litigation as it streamlines the definition of wages. This would ensure better labour satisfaction and more efficient economic activities.
  2. It will substantially reduce the number of minimum wages in the country from the, existing more than 2000 rates of minimum wages.This would ensure that every worker gets a minimum wage which will also be accompanied by an increase in the purchasing power of the worker thereby giving a fillip to growth in the economy.
  3. A statutory national minimum wage would have multiple impacts including helping lift wage levels and reducing wage inequality, thus furthering inclusive growth.
  4. For India to reap the much touted ‘demographic dividend’, robust wage expansion would ultimately be essential to help buoy consumption-led economic growth.

The Article 43 of the Constitution of India states that the state shall endeavor to secure by suitable legislation or economic organization or in any other way to all workers a living wage, conditions of work ensuring a decent standard of life and full enjoyment of pleasure and social and cultural opportunities.Some of the issues like what would the states which already provide higher minimum wage than the proposed national minimum wage do.The minimum salary needs to be adjusted regularly to keep pace with inflation. A mechanism should be developed to adjust minimum wages regularly and more frequently.

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