New Wage Code Bill to jolt formal job creation
Union cabinet yesterday cleared the labour code on minimum wages, which if passed in its entirety by the Parliament will be particularly disastrous for small-scale industries. The bill will hamper formal job creation in the country. Creating a minimum wage barrier of Rs. 18,000/- will negatively impact entry level jobs at many industries across automobile, construction and real estate, e-commerce, logistics, educational services, FMCG, FMCD, healthcare and pharma, hospitality, industrial manufacturing and allied sectors, media and entertainment and retail and telecom.
The impact of this will be the highest at the entry level jobs because that is where the salary is less than Rs. 18,000/-. The economics of wages in tricky however is largely dependent on demand and supply of talent and the cost of living. It is unfair to apply a universal minimum wage across different States with varying demographics and across different roles. The bill if passed will place considerable burden on the employers as they will not be able to pass on this sudden rise in cost to customers. This entry barrier will mean that either the businesses will not be able to mushroom or be competitive. Therefore it is highly likely that now these entry level jobs will move back to the informal sector. Employers could have absorbed this increase in wages to some extent if prioritization was done focusing on reforms that reduce cost of compliance by making it presenceless, paperless, cashless and increase ease of doing business.
With the implementation of this bill, any State that wants to pay more than the set amount by the Central Government are free to do so but they cannot pay a lesser amount. Which means the minimum wage for someone working in a metro city will be the same as that of a person in a small town. Likewise a B.com graduate and a 10th pass delivery boy of an ecommerce company will get the same minimum wage at the entry level which employers might not be able to afford.
Ms. Rituparna Chakraborty, Executive Vice President and Co-founder at TeamLease Services & President Indian Staffing Federation expressed her concern about the bill, “this could mean that industries will start automating at a faster rate thereby further impacting job creation. The idea of the wage code bill was to comprehensively rationalise four different laws into one and bring about uniformity in definitions. The fact that the wage code bill got high jacked into universal minimum wage agenda is confusing. Formal Job creation should be the only agenda that drives any labour reform in this country.”
The Median salary in various sectors is less than Rs. 18,000/- and increasing this to Rs. 5,000/- Rs. 7,000 /- per employee will result in increasing cost to the company, which is definitely impact the hiring scenario in the country. Following are the jobs that are likely to get impacted and their current median salaries:
| Job Profile | Median Salary (per month) | |
| Automobile & Allied Industry | ||
| Mechanic | Rs.9,000 – Rs.12,000 | |
| Operator | Rs.8,000 – Rs.10,000 | |
| Service Supervisor | Rs.17,000 – Rs.22,000 | |
| FMCD | ||
| Loader and Picker | Rs.8,500 – Rs.10,000 | |
| Packing Assistant | Rs.8,000 – Rs.10,000 | |
| Wireman Control Panel | Rs.10,000 – Rs.12,000 | |
| Module Assembly Technician | Rs.10,500 – Rs.12,500 | |
| Healthcare & Pharmaceuticals | ||
| Medical lab Technician | Rs.12,500 – Rs.15,500 | |
| Diet Assistant | Rs.7,500 – Rs.10,500 | |
| General Duty Assistant | Rs.8,000 – Rs.10,000 | |
| Field Service Executive | Rs.10,500 – Rs.12,500 | |
| Media & Entertainment | ||
| Cable Operator | Rs.11,000 – Rs.13,000 | |
| Technician | Rs.9,000 – Rs.11,000 | |
| Cable Boy | Rs.7,000 – Rs.9,000 | |
| IM&A | ||
| Admin Helper | Rs.7,500 – Rs.9,500 | |
| Telephone Operator | Rs.9,500 – Rs.11,500 | |
