What are the key features and significance of the Draft Wages Code Bill 2017?

With an attempt to mark the initiation of labour reforms the government is pushing for the wage code bill.
Features of the bill:

  • The Code would replace four existing laws of Payment of Wages Act, 1936, Minimum Wages Act, 1948, Payment of Bonus Act, 1965, and Equal Remuneration Act, 1976.
  • The code provides central government to set minimum wages for certain employments including railways and mines and State governments to set minimum wages for all other employments. 
  • The Code provides for a national minimum wage to be set by the central government.  States cannot set minimum wages lower than the national minimum wage.  Further, the central government may set separate national minimum wages for different states or regions of the country.  
  • Minimum wages must be revised by the central or state governments at an interval of five years. 
  • The overtime rate to be at least twice the normal rate of wages of the employee.

Significance of the bill:

  • The bill strives to maintain the balance between the ease of doing business and protecting the labour sector by initiating labour reforms.
  • The national minimum wage and mandating states to set the minimum wages not below the national minimum wage would aid in bringing uniformity across the states with due consideration to local circumstances.
  • Merging of the four existing laws would also aid in ease of governance for the government and ease of compliance for the private sector. Thus upholds the motto of minimum government and maximum governance.

Issues about the bill:

  • The Equal Remuneration Act, 1976, prohibits employers from discriminating in wage payments as well as recruitment of employees based on gender.  While the Code prohibits gender discrimination on wage-related matters, it does not include provisions regarding discrimination during recruitment.  
  • Labour being in concurrent list the effective implementation of the provisions will also be a daunting task.
  • The bill takes away the current flexibility with the states in revising minimum wages, as long as it is not more than five years.

Stringent and complex labour laws are often leading to menace of inspector raj adversely affecting the ease of doing business. The draft bill can be of great aid to protect the interests of labourers.

Question for UPSC Mains:
What are the key features and significance of the Draft Wages Code Bill 2017? [THBL]

Published: March 5, 2018 | Modified:June 27, 2019

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