The Centre is exploring plans to sharply raise the national daily minimum wage to ₹350-450, at a time workers’ protests have prompted wage hikes in Uttar Pradesh and Haryana.
The Union labour ministry is working on fixing minimum wages for all workers in skilled, semi-skilled and unskilled categories, two people aware of the development said. Once a national floor is set, states will be compelled to revise their minimum wages accordingly, as wages cannot be set below the national floor. The monthly payout will be 26 times the final daily wage.
Under the Code on Wages, 2019, the floor wage is a single baseline fixed by the Centre, and applies to all categories such as skilled, semi-skilled and unskilled.
“The government is in the process of finalizing the floor wage, and discussions on the same are in the final leg,” said one of the two people cited above, adding that consultations with states, industries and other stakeholders are almost complete. The current national floor wage of ₹176 was set in 2017.
Wage gap
The development assumes significance given the worker disgruntlement and the widening gap between the pace of real wages and corporate profits. The 2024-25 noted that despite Indian companies maintaining a stable Ebitda margin of around 22% over the past four years, wage growth has moderated. Ebitda stands for Earnings Before Interest, Taxes, Depreciation and Amortization (Ebitda), and is a measure of profitability. The uneven trend raises concerns, with wage stagnation particularly evident in entry-level IT roles, the Survey noted.
At the central level, the changes are being made under the new labour codes, the second person said. “As all four labour codes have been notified and have become operational, the rules for the same are being worked on,” the person said.
The Centre has introduced four to streamline wage and labour regulations. The Code on Wages, 2019 provides for a national floor wage and uniform wage definition, while the Industrial Relations Code, 2020 focuses on dispute resolution and hiring flexibility. The Code on Social Security, 2020 expands benefits to more workers, and the Occupational Safety, Health and Working Conditions Code, 2020 aims to improve workplace conditions.
State moves
Haryana has raised minimum wages by a sharp 35%, taking monthly pay for unskilled workers to around ₹15,200. After worker protests, neighbouring Uttar Pradesh raised minimum wages for unskilled workers in industrial hubs Noida and Ghaziabad from ₹11,313 to ₹13,690 per month, while semi-skilled workers now earn ₹15,059, up from ₹12,445, and skilled workers ₹16,868, compared to ₹13,940 earlier. Meanwhile, Maharashtra, Karnataka, Gujarat and Tamil Nadu have said that, as their wages are above or near the proposed floor wage, they may revise them if needed, while Bihar and Punjab are working in the same direction. The Punjab government has sent the wage hike proposal to its finance department for consideration, a senior state official said.
Queries emailed to the labour ministry and the Prime Minister’s Office remained unanswered till press time. Queries emailed on Wednesday to the spokespersons and chief secretaries of Maharashtra, Karnataka, Gujarat, Tamil Nadu, Punjab and Bihar also remained unanswered.
Experts say that states should revise wages annually, considering the local cost of living as the base, as this would make adjustments more gradual and predictable.
“This is an ongoing process that some states already follow every year. If revisions are done annually, the burden on the industry becomes smoother. Otherwise, if wages are increased suddenly by factoring in inflation of the last two to three years together, it leads to a substantial hike, which can disrupt industry planning,” said professor N.R. Bhanumurthy, director of the Madras School of Economics.
“There are many states that have not revised their wage structure for years. If regular annual revisions are followed, it can help avoid situations of labour unrest. The local cost of living index should be used on a regular basis to revise wages at the state level, and that is the only sustainable way,” Bhanumurthy suggested.
Variance
differ widely across states. Karnataka, Maharashtra and Tamil Nadu have higher wages than the national floor, with unskilled workers earning ₹15,000-16,000 per month. Gujarat offers moderate wages of about ₹12,700- ₹13,000, while Bihar and Punjab remain on the lower side.
Political parties emphasized the need for regular and inflation-linked wage revisions to ensure better income security for workers.
“The government should update wages regularly based on the cost of living so that workers can manage their daily expenses. If wages are revised every year, it will avoid sudden increases later and make it easier for both workers and industry to adjust,” said Ram Surat Rai, former minister of revenue and land reforms in the Bihar government, and a BJP leader.
“Wages should increase in line with rising prices so that workers can meet their daily needs. ruled states like Karnataka and Tamil Nadu are already revising wages annually. Other states should also adopt a similar approach to ensure timely revisions and avoid distress among workers,” said Ranjeet Ranjan, a senior leader in Congress and member of Rajya Sabha.
“Workers’ wages should be linked to inflation, and the wide disparities in wage levels across states need to be addressed. For instance, there is a significant difference in wages between Haryana and Uttar Pradesh,” said Rajiv Khosla, professor of economics at Amity University, Punjab.
“Increase in wages means that the lives of workers will improve. This may attract slightly better talent into the labour pool, which is very important. If India has to build quality, the rise in wages of about 10 to 15% is not likely to have a significant impact on the final cost of the product, as labour is a small part of the overall cost,” said Ravi Saxena, chief executive officer (CEO) and founder of Wonderchef, an appliance maker.