Understanding Minimum Wages: Are Basic + DA Rates the Same for All Skill Levels?

Dear All,

Please let me know about the minimum wages for unskilled, semi-skilled, and skilled workers. Are the minimum wages the same for Basic + DA?

Thank you.

Wage Differences Between Skilled and Unskilled Laborers

How can wages be the same for skilled and unskilled laborers? Wages are the remuneration for services. The services provided by a skilled worker will not be the same as those provided by an unskilled worker. Therefore, the basic wage will differ for different categories of workers. At the same time, there can be different treatment with regard to allowances. These allowances can be the same for all employees or can differ according to grades or skills.

Variable Dearness Allowance (VDA)

Variable Dearness Allowance, which is expected to adjust the cost of living index or increase or decrease in the consumer price indices, will be fixed for all categories of employees. This is because there cannot be a different consumer price for different categories of employees. All employees get their needs from the same market. Variable DA is adjusted to the price index over time. Some states (like Tamil Nadu) fix it on a 12-month period, whereas some other states (like Maharashtra, Karnataka, etc.) fix it for a 6-month period. In some states like Kerala, DA is adjusted every month based on the CPI of that month. Since DA is a certain amount per increase in CPI, it will be the same for all employees.

In respect of employees who are not under the Minimum Wages Act, there can be a different salary structure.

Regards, Madhu.T.K

Many SMS and emails have been received from the Union Labour Minister, EPF, and ESI stating that the minimum wage has been increased to Rs 350 per day. What is the effect and action of these messages? How is it to be calculated, multiplied by 25/26 or 30? Would it be applicable without notification from State Governments, and if so, from when? Has any notification been issued?

Minimum Wages and State Jurisdiction

Minimum wages are a state subject. The SMS you receive pertains to the one announced by the Central Government. It is a blanket statement issued just to mollify the strike called by trade unions. Now, the states have to issue notifications putting this as the minimum rate applicable for unskilled workers.

Challenges with the New Wage Announcement

Another major challenge is that this 350 is the gross wage per day, and the state will have to redo it by bifurcating the amount into the basic rate and dearness allowance. Otherwise, this 350 should be treated as the basic rate, and DA will have to be paid extra.

In states like Kerala, where the minimum rate of wages is already more than 350, what is to be done is another challenge. Anyway, we cannot reduce the wages in tune with the central notifications.

Regards, Madhu.T.K

Dear Anonymous,

Mr. Madhu T.K. has replied to your query very nicely, and I would like to add that the classification of workmen under the Minimum Wages Act is done by the state or competent authority. In the case of regular workmen, you may classify them based on their required skill set, and wages can be fixed as either a fair wage, a living wage, or a minimum wage.

Regards