Evolution of Wage Code in India
The Indian government has recently introduced a new wage code aimed at
streamlining and simplifying wage-related laws. The wage code consolidates four
existing labour laws, including the Minimum Wages Act, 1948, and the Payment of
Wages Act, 1936. This essay will examine the evolution of the wage code in India
and its implications for workers and employers. Relevant examples from the
Indian context will be provided, along with credible sources to support the
The first wage legislation in India was introduced in 1948 with the enactment of
the Minimum Wages Act. The act mandated a minimum wage for workers in certain
industries and sectors. Over the years, additional legislation was introduced to
regulate wage-related issues, including the Payment of Wages Act in 1936, the
Equal Remuneration Act in 1976, and the Payment of Bonus Act in 1965. These laws
were intended to protect workers' rights and ensure fair compensation.
The Evolution of the Wage CodeIn 2017, the Indian government began the process of consolidating and
simplifying labour laws with the aim of improving the ease of doing business in
the country. The Code on Wages Bill was introduced in parliament in 2019 and
later passed into law in August of that year. The new wage code consolidates the
four existing laws into one and introduces several new provisions aimed at
protecting workers' rights.
One of the most significant changes introduced by the wage code is the
definition of a "worker." The new definition includes all employees, whether
they are temporary or permanent, and extends wage protection to all workers,
regardless of their employment status. The wage code also introduces a concept
of a "floor wage," which is a minimum wage that is set at the national level and
varies based on geographical location.
Implications for Workers and Employers
The wage code is expected to have significant implications for both workers and
employers in India. For workers, the new legislation will provide greater wage
protection and reduce wage discrimination. It will also ensure that workers
receive fair compensation for their work. Employers will benefit from simplified
wage-related legislation, which will make it easier to comply with labour laws.
However, there are concerns that the wage code may lead to job losses and
reduced employment opportunities. The introduction of a floor wage may lead to
increased labour costs for employers, which could result in job losses. There
are also concerns that the wage code may lead to increased informality in the
labour market, as employers may choose to hire workers on a contractual basis to
avoid paying the floor wage.
Relevant Examples from the Indian ContextIn 2020, the Indian government announced that it would raise the minimum wage
for workers in the unskilled category to Rs 202 per day. This increase was in
line with the wage code's provisions on the floor wage.
In 2021, the Indian government extended the applicability of the Minimum Wages
Act to all workers, regardless of their employment status. This extension was in
line with the new definition of a "worker" introduced by the wage code.
In conclusion, the wage code represents a significant step towards consolidating
and simplifying labour laws in India. The legislation is intended to provide
greater wage protection for workers and reduce wage discrimination. However,
there are concerns that the new legislation may lead to job losses and increased
informality in the labour market. As the wage code is implemented, it will be
important to monitor its impact on workers and employers in India.
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