In view of declining global and domestic demand, which has impacted Indian manufacturers, the labour ministry for the time being has put on hold a proposal to increase minimum wages for all by up to 25 percent announced last year and will now consider it later when the demand picks up, so that the additional burden incurred by manufacturers through higher wages is compensated by increase in order inflow.
Labur ministry further elaborated that the time is not correct to increase the wages and make it binding on all states as this would raise the input cost for manufacturers and make them uncompetitive. The substantial hike in labour wages will go against the government's approach to Make in India and could impact investment decisions for now.
Last year, the labour Ministry has put a proposal to enhance minimum wages where all states and union territories were grouped into three categories based on per capita income and minimum wages for the unskilled, semiskilled and skilled workers in each of the provinces. Accordingly, the states like Bihar, Uttar Pradesh, Manipur, Assam and Jharkhand, with least per capita income, the minimum wage could be around Rs 6,000 a month, a hike of 25 percent based on raised National Floor Level Minimum Wage to Rs 160 a day from Rs 137. The government wants to enhance minimum wage as a major attraction for manufacturers to set up shops in the country along with its focus on the ease of doing business.
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