Critiquing the Statutory Minimum Wage: A case of the export garment sector in India

Authors: Mohan Mani, Babu Mathew and Dithhi Bhattacharya

Abstract

With weakening of labour laws and declining collective bargaining strength, the Statutory Minimum Wage is increasingly the sole determinant of wage in many sectors of industry in India. However, there are no standard and accepted methods to determine and regulate the fixing of the Minimum Wage, or the Dearness Allowance linking wage to the Consumer Price Index and compensating for inflation impact on wage. This is therefore an issue demanding attention from trade unions, labour law regulators and other linked professionals. The present study examined Minimum Wage determination and calculation of the standard basket of commodities based on the expenditure pattern of families of workers in the ready-made export garment industry. The study covered a sample of 85 workers in and around Bangalore in Karnataka, and 71 workers in the NCR region. The average minimum monthly expenditure per family was estimated as Rs.12245 in the NCR and Rs.13742 in Karnataka. The Minimum Wage in both regions was only around 60% of this expenditure. However, this monthly expenditure cannot be said to represent the real need of workers, as it is constrained by the low income in the sector. The study suggested that for a proper estimation of the needs of a family, and therefore the Minimum Wage, at least two normative constructions of the appropriate food basket for the standard family size, which should include 3 adults and 2 children, and a minimum housing of 2 rooms and independent kitchen and bathroom facility should be included. Using the food basket calculation of the Delhi Minimum Wage Advisory Committee estimated in December 2016, and the rent estimate for a 2-room house in the areas where garment workers lived, the Need Based Minimum Wage worked out to around Rs.18000-20000 per month.