Labor Code: Salary of 40 crore workers will be increased, who will get the benefit?

News Topical, Digital Desk : With the implementation of the new labor code, wages will increase for over 400 million unorganized sector workers. SBI estimates that wages for unorganized sector workers could increase by up to 95 rupees per day, or approximately 3,000 rupees per month.

Economists say that raising the minimum wage will boost workers' consumption, giving the economy a significant boost. However, the increase in minimum wages and changes to gratuity rules will also increase costs for businesses.

Increase in wages of 40 crore workers

Currently, a minimum of five years of service is required to receive gratuity. However, with the implementation of the new code, workers will be paid gratuity after just one year of contract work. Secondly, gratuity is currently paid based on basic salary, but when the new rules are implemented, it will be paid based on total salary.

Ensuring social security benefits for both permanent and non-permanent employees will also increase the costs of establishments. Under the new labor code, the central government is going to set a floor wage or pay scale for workers across the country, and no state will be able to pay its workers less than that floor wage.

The floor wage rule will apply to all types of workers working in offices, shops, or private establishments. The floor wage will be established within the next three months.

Currently, each state sets a different minimum wage for its own state. Currently, the minimum salary for unskilled workers in Rajasthan is less than ₹8,000 per month.

Changes from the new labor code

In states like Bihar, Punjab, Haryana, and Uttar Pradesh, the minimum wage for unskilled workers ranges from ₹11,000 to ₹12,000 per month. In Delhi, the minimum wage for unskilled workers is over ₹18,000 per month.

After the floor wage is fixed by the Centre, there can be a uniform minimum wage in all the states. According to NITI Aayog member Rajiv Gauba, now it will be mandatory to give appointment letters to all types of workers.

Workers will have written proof of their employment and wages. Previously, minimum wage regulations were only applicable in scheduled industrial units; now, they will be applicable everywhere. Consolidating 29 labor codes into four will boost investment, creating new jobs.

Increase in gratuity will increase their cost.

Anil Bhardwaj, General Secretary of Federation of Indian Micro, Small and Medium Enterprises (FISME), says that the new code will provide relief to entrepreneurs from compliance with various rules, but their costs will increase due to increase in salary and gratuity.

FISME is consulting with member units to present their views to the government. According to the Labor Ministry, the floor wage will be notified within the next three months.

Rajiv Chawla, Chairman of Integrated Association of Micro, Small and Medium Enterprises of India, says that the Central Government is giving employment linked incentives to SMEs, which will provide them some relief, but overall the cost will increase.

Under the new code, entrepreneurs can close units with fewer than 300 employees at any time without government permission. Currently, this limit is 100. Strict closure rules often prevent entrepreneurs from setting up new units even after receiving orders.

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