Does the Minimum Wage actually reduce salaries?

The new notification issued by Rajasthan government to fix the minimum wages of a domestic worker at Rs 5,612 per month, for eight hours of work, contradicts the demand put forth by their own government at the Centre, which in August 2015 sought to set it at Rs 9,000 per month as part of a national policy.

Domestic workers were included in the statutory scheduled category of Rajasthan only eight years ago, making these workers eligible for a minimum wage. So the current notification, which brings about some hope after eight long years, is a well intended move, but can barely provide for the basic needs of a domestic worker and her family.

Here is why:

The notification states that a domestic worker has to be paid Rs 705 per month, per four-member household. We are faced with a situation where a worker, who shuttles between three to four households on an average in a day, according to the newly fixed wage will only end up making anywhere between Rs 2,800 and Rs 3,500 per month. In this particular instance, her monthly wage is even lesser than the minimum wage for unskilled workers set by the same government! If we stretch this argument further, according to a 1982 order of the Supreme Court, anyone who is paid lesser than the minimum wage could be considered to be employed in a situation of forced labour. In a year when we are commemorating Baba Saheb Ambedkar’s 125^th anniversary, it is ironic that a notification like this goes against the spirit of the Constitution that he drafted and the Fundamental Rights (Constitution of India recognises Forced Labour as a violation of the Fundamental Rights) enshrined in it for every citizen.

The notification has been widely criticised by women workers’ unions, like the Rajasthan Mahila Kaamgar Union, which have been demanding Rs 1,500 instead of the newly notified Rs 705.

It is pertinent to mention here that majority of households hire domestic workers specifically on work basis, and therefore new minimum wage at Rs 5,642 is hardly applicable in most cases. More often than not, Rs 705 per month is what is going to be followed as a benchmark. The other perks like food, clothes, accommodation and so on are not legally binding on the part of employer.

In this case, workers’ organisations should be demanding for statutory minimum wage, which shall not be less than Rs 10,000; an amount arrived at by workers-led unions through consultative processes and negotiations with the government.

Moreover, the latest Rajasthan government notification is also silent on social security measures such as crèche facilities, maternity entitlements, heath entitlements, which have all been widely accepted as a basic necessity of domestic workers, who are largely women.

It is to be noted that the notification is also silent on compulsory paid leave and social security, which were too part of proposal announced by Union Labour ministry last year.

The only proviso that seems to be in the interest of the worker is the clause on prosecution to violators and compensation. However, implementation of this isn’t going to be easy, given the dismal staff strength of labour administrations and how historically labour governance structure have failed to cater to the need of unorgansied sector workers.

In Rajasthan, for example, the nearest point of contact with the labor department is at the district level. Each district office, only has about four labour inspectors managing a cluster of three to four blocks. This is an optimistic figure. Several districts are known to operate with one labour inspector! Rajasthan has just 19 factory inspectors to enforce safety regulations for 12,907 factories employing 479,141 workers. This comes to an average of 25,217 workers in 679 factories under the charge of one inspector. In such a scenario, when you are unable to cater to your own “formal” workforce, imagine the attention that informal sector workers are set to receive. Now on top of this, highly invisible workforce such as domestic workers stands to be at the greatest disadvantage.

Independent estimates point to close to 300,000 women engaged in domestic work. Formations such as Rajasthan Mahila Kaamgar Union claim that 80 per cent of these are migrant workers, who are faced with extreme vulnerability and distressing forms of exploitation. What is the need of the hour is to revise the National Minimum Floor Wage urgently, to the levels promised at the Inter-Ministerial negotiations with Central Trade Unions, held in August 2015, which was at the rate of at least Rs 273 for eight hours of work. It is also important to extend minimum social security to 93 per cent of India’s informal work force, which includes domestic workers. Else, piecemeal notifications like these are barely in the interest of the workers.