The Centre has begun constituting a Central Advisory Board (CAB) to recommend the national floor wage, as reported by Business Standard. Once notified, this board will become the legally binding minimum threshold below which states and union territories cannot fix their minimum wages. The board will comprise 15 members including representatives of employers, trade unions, independent members, and five state government representatives nominated by the Centre. The labour ministry has now begun consultations with states and is preparing to constitute the Central Advisory Board, with the Board's advice along with inputs from state governments helping determine the floor wage and whether different geographical regions require different benchmarks.
The technical exercise will build on estimates prepared by an expert group chaired by economist and statistician S P Mukherjee, which submitted its report to the labour ministry in 2021, according to Business Standard. The panel had recommended a methodology based on household consumption requirements and regional variations in the cost of living. While the report is expected to form the basis of the current exercise, the consumption basket is likely to be updated to reflect inflation since the panel submitted its recommendations. The exercise also comes amid changing inflation levels and differences in living costs across states, factors that the Code allows the government to consider while fixing the floor wage.
According to a senior official quoted by Business Standard, discussions are ongoing with states as one of the biggest challenges is state-wise variation in minimum wages. The government has not indicated a timeline for notifying the national floor wage, though the exercise marks the next step in implementing the Code on Wages, one of the four labour codes that came into force last year. The Code requires the Central government to fix the floor wage after considering the minimum living standards of workers and consulting state governments, with the government also seeking advice from the Central Advisory Board before notifying the floor wage.
Unlike the earlier National Floor Level Minimum Wage, which was a non-binding benchmark last revised to ₹160 per day in 2015, the national floor wage under the Code will be legally binding, requiring states and union territories to ensure their minimum wages are not set below it, as reported by Business Standard. The provision is expected to be one of the most closely watched aspects of the labour codes because of its implications for wage levels across states and sectors. The biggest change is that the floor wage moves from an advisory concept to one recognised in law, with the Code requiring governments to ordinarily review or revise wage rates at intervals not exceeding five years.
The national floor wage creates a common minimum benchmark across India while allowing states to account for regional differences, as reported by Business Standard. The Code does not create a single national minimum wage - instead, it creates a national floor wage below which states cannot go. States will continue to notify their own minimum wages based on local conditions, industries, skill levels and geographical differences. A state that already pays higher minimum wages can continue to do so, with workers in states with higher living costs likely to continue receiving higher statutory minimum wages than workers elsewhere. The floor wage is not the wage every worker will receive but sets the legal minimum benchmark that states must follow while fixing their own minimum wages.
