Introduction: Legislative Context and Significance

The Code on Wages, 2019, enacted by the Indian Parliament, consolidates four labour laws including the Minimum Wages Act, 1948. It aims to regulate wage fixation and payment across sectors for approximately 50 crore workers. However, it stops short of instituting a statutory national minimum wage or a legally enforceable living wage. This legislative gap perpetuates income inequality and leaves over 90% of India's informal workforce vulnerable to wage exploitation, undermining constitutional mandates under Article 43 of the Directive Principles of State Policy.

Constitutional and Legal Framework Governing Minimum Wages

Article 43 directs the State to secure a living wage for workers, establishing a constitutional commitment beyond mere minimum wages. The Minimum Wages Act, 1948 empowers central and state governments to fix and revise minimum wages for scheduled employments (Sections 3 and 6). The Code on Wages, 2019 (Sections 5 and 6) retains this decentralized wage fixation mechanism but does not prescribe a uniform national floor wage or mandatory periodic revision linked to inflation or cost of living.

Judicial pronouncements, notably Olga Tellis v. Bombay Municipal Corporation (1985), have underscored the right to livelihood as implicit in the right to life under Article 21, reinforcing the need for wage protections. Yet, the Code’s broad delegation to states without a binding national standard results in wide inter-state wage disparities and inconsistent enforcement.

Economic Realities and Labour Market Challenges

• According to the Periodic Labour Force Survey (PLFS) 2019-20, over 90% of India’s workforce is informal, lacking social security and prone to wage exploitation.
• The Economic Survey 2023-24 documents a 2% decline in real wages for low-income workers from 2010 to 2020, indicating stagnation or erosion of purchasing power.
• The International Labour Organization (ILO) estimates that raising statutory minimum wages to living wage levels could reduce poverty by 5-7%, highlighting the poverty-alleviation potential of enforceable wage floors.
• Wage arrears in the unorganized sector were estimated at Rs 1.5 lakh crore in 2022 by the Centre for Monitoring Indian Economy (CMIE), underscoring enforcement deficits.
• Budgetary allocation for the Ministry of Labour and Employment (MoLE) in 2023-24 stood at Rs 2,200 crore, insufficient for comprehensive enforcement and monitoring across sectors.

Institutional Roles and Enforcement Mechanisms

The Ministry of Labour and Employment formulates labour laws and oversees enforcement. The Central Advisory Board on Minimum Wages (CABMW) advises on wage fixation but lacks enforcement authority. State governments retain jurisdiction over fixing and revising minimum wages, resulting in heterogeneous wage floors and enforcement capacity.

Labour Courts and Industrial Tribunals adjudicate wage disputes but face backlogs and limited reach, especially in informal sectors. The ILO provides technical assistance and global standards but cannot enforce compliance domestically.

Comparative Perspective: Brazil’s National Minimum Wage Policy

Critical Gaps in the Code on Wages, 2019

• Absence of a legally enforceable national floor wage leads to inter-state wage disparities and undermines uniform worker protection.
• No mandatory linkage of minimum wage revision to inflation or cost of living results in real wage erosion over time.
• Enforcement mechanisms remain weak due to inadequate budgetary support and institutional capacity constraints.
• The Code does not explicitly address the informal sector’s unique vulnerabilities, where over 90% of workers remain unprotected.

Way Forward: Policy and Institutional Reforms

• Enact a statutory national floor wage aligned with living wage benchmarks and indexed to inflation and productivity.
• Strengthen enforcement through increased budgetary allocations to MoLE and capacity building of labour courts and inspection agencies.
• Mandate periodic revision of minimum wages with transparent criteria and stakeholder consultation.
• Extend social security and wage protections explicitly to informal sector workers via targeted schemes and legal recognition.
• Leverage ILO technical assistance to align domestic standards with international labour norms.