Delhi Govt Delays Minimum Wage Hike While Workers Financially Struggle

The Delhi government has been sitting on a proposal to increase the minimum wages – a bi-annual move meant to offset the impact of rising inflation – for this year, thereby causing a delay that is potentially affecting over 50 lakh workers in the national capital.

The process to hike the wage has not been expedited despite a surge in prices of essential items triggered essentially by “supply shocks” in the wake of restrictions on movements. The price rise has been a body blow for the budgets of these workers’ families

The government raises the Dearness Allowance (DA) – a component of the wage structure – twice a year, in April and October. This is done so by revising the rates of Variable DA (VDA) component on the basis of the average consumer price index number for the preceding period of six months.

In Delhi, minimum wages for unskilled workers are currently fixed at Rs. 14,842 per month, at Rs 16,341 for semi-skilled workers, and at Rs. 17,991 per month for skilled workers. The revisions in VDA typically results in an increase of 2 to 3% in the wage rates for all categories of workers.

A notification to this regard, for both April and October, has not yet been issued by the Arvind Kejriwal-led Aam Aadmi Party (AAP) government. The proposal is currently “under submission”, Delhi government’s labour department claimed in an RTI reply dated October 20 to one Surjeet Shyamal, a labour activist based in the national capital. The orders shall be issued “when the Government decide(s),” the reply added. The reply copy, accessed by NewsClick, bears no explanations as to why there is a delay.

Shyamal, while speaking with Newsclick, criticised the delay in revising the VDA component. “Not increasing the minimum wages is certainly hurting the many private sector workers in the city, who are anyway bearing the brunt of an unplanned lockdown, that resulted in heavy job losses and cuts in wages,” he said.

He added that a notification must be issued soon, even more so when other states including Bihar and Haryana, and even the central government, have done so. “The Delhi government could think about giving relief to the businesses who are said to be under financial stress due to the COVID-19 situation. But what about the workers? Who will look after them and their needs?” asked Shyamal, who also runs a blog, WorkerVoice.

Calls made by NewsClick to the offices of the Labour Commissioner and Additional Labour Commissioner went unanswered.

The enhancement in wages in the face of pandemic-triggered economic disruptions, the union leader argues, would help the workers cope with tough times. Recently released government data shows that the retail inflation rate has hit an eight-month high of 7.3%, up from 6.69% in August.

Not only that, more money in the hands of workers would also assist in bringing the dwindling economy back on track, as more wages would lead to the required demand push, experts have maintained. The nation’s gross domestic product (GDP) recorded a decline of 24% in the first quarter of this year, compared to the respective quarter of the last fiscal year.

However, as far as minimum wage rates are concerned, their implementation is much more needed than just notifying them, believes Tapan Sen, general secretary of the Centre for Indian Trade Unions (CITU). “In the national capital, even after notifying hiked minimum wage rates last year, its benefits are only seen in areas where there is a strong trade union presence who can press the employer to adhere to the rates,” he said.

The minimum wage rates in Delhi saw an increase of 37% last year, after the Supreme Court upheld the Delhi government’s March 2017 notification – challenged by over 40 employers’ associations.

“The 2019 hike was welcoming,” Sen said. He, however, rued that its enforcement is still very “lackadaisical.”

When asked about the non-revision of VDA rates, Sen argued, “This has been a demand of the businesses for a very long time and they are being heard at the cost of the workers in the wake a pandemic.”

Meanwhile, the Centre on Thursday launched a new series of Consumer Price Index for industrial workers (CPI-IW) with a new base year of 2016, along with the decision to give more weight to non-food items under it than the earlier 2001 index.

This index is the one mostly used by the Centre and the states to increase the VDA component of the minimum wages twice a year.

The entire exercise, “has been thoroughly arbitrary, deliberately designed to suppress the real impact of the price rise of essential items for human survival and also to deprive the workers of their entitlement for legitimate DA,” the CITU had earlier reasoned in a statement expressing “concern” over the development.