NEW DELHI: Poverty alleviation and decrease in wage inequality in the country can be achieved if the country has a well-formulated minimum wage system, the Economic Survey stated.
“A well-designed minimum wage system can be a potent tool for protecting workers and alleviating poverty if set at an appropriate level that ensures compliance. International experience has shown that relatively simple systems are more effective and usually complex systems are least effective,” the document stated.
The survey, which was tabled in Parliament on Thursday, also stated that the wage system had expanded and become more complex while suggesting that the complexities arose from the issues of coverage.
It suggested the implementation of minimum wages for four categories — unskilled, semi-skilled, skilled and highly skilled - based on the geographical region of operation. “It should cover all workers, irrespective of any wage ceilings,” it stated.
According to the findings, a minimum wage system would also play a key role in removing the wage inequality among women, who ‘constitute the bottom rung of the wage distribution system’ while pointing out that one in every three wage workers does not come under the minimum wage law currently.
The survey backed the Wages Bill saying that the rationalization of minimum wages proposed in the Bill needs to be supported. A national floor minimum wage was also proposed and the survey said that it could vary across five geographical regions.