What is Universal Minimum Wage in the new Labor Code, a boon for workers or…

New Delhi. There has always been a confusion regarding wages in the country. Every state had its own rates, every sector had its own conditions and every industry had its own rules. In such a situation, it became difficult for the laborer to understand what should be considered the right wage and on what basis his earnings should be decided. To end this confusion, the government has created a system of national minimum wage by bringing the rules related to wages at one place. This means that a uniform minimum wage will be fixed in the entire country, which no state can reduce at its own level.

This change sounds technical but its biggest strength is that it will provide security to the income of the workers. Whether they travel in any state or work in any factory, there will be less scope for arbitrariness in their rightful earnings. The government believes that uniform wages will improve the standard of living of workers and will also reduce the insecurity of workers in industrial areas.

Now the definition of wage is one

A major change made in the code is that the definition of wages will be the same across the country. Earlier, different rules used to apply in different states, due to which companies would sometimes reduce the allowance by increasing the basic pay and sometimes would do the reverse. In the new system, it has been made clear what amount is meant by wage and the same will be considered the basis for any calculation. The workers will directly benefit from this because now the companies will have less scope to play with the figures.

States will not be able to reduce the minimum wage

National minimum wage is a kind of floor which sets the minimum level of wages. No state can fix wages lower than this. If any state wants, it can increase it but cannot reduce it. This will provide relief to those workers who work in less developed areas where the wages are still very low. This step can help in gradually reducing regional disparity in wages.

Stability and security in worker’s income

When a minimum level of salary is fixed, the worker’s income becomes stable. This makes it easier for them to take loans, plan their children’s education and meet the basic needs of the family. Economic experts say that in the long run this will increase consumption and the economy will also benefit. Besides, it is also expected that migration of workers may also reduce to some extent because the situation of arbitrariness regarding wages will end.

What will change for small businessmen and startups

Till now, most of the small units have been running their work in an informal system without written contracts, without social security and without timely salaries. After the implementation of the new Labor Code, it will be mandatory to give appointment letter and salary will have to be paid on time. This change is not only beneficial for the employees, but small entrepreneurs will also benefit from it in the long run because employment relations will be governed by fixed rules and disputes will be reduced.

Meanwhile, Lakshmi Venkataraman Venkatesan, Founding and Managing Trustee of Bharatiya Yuva Shakti Trust, said that the new labor code brings a major structural change for micro and small enterprises as it converts 29 different laws into one framework. According to him, bringing together wage equality, social security and workplace safety will reduce future uncertainty for small businessmen. He also said that systems like single registration and single return can make compliance easier, especially for those who do not have a separate HR or legal team. However, he warned that the real test of the change lies in how it will be implemented and whether it will result in a new inspector raj for micro enterprises. Small businesses will also have to change their cost structure and systems according to the new requirements of documentation and benefits.