It’s a ‘bravo’ move from the Modi Government. Better late than never considering the Government understood the importance of the bigger issue of our country — Minimum Wage. Being in the recruitment industry for more than seven years and facing the issues of under-paid jobs, I genuinely believe it’s a great move from the Modi Government. But is this going to create an extraordinary impact?
Well a couple of days ago, the Modi Government announced to bring changes in the Minimum Wages Act and made sure every person in India whether he/she in blue/white collar jobs earns minimum INR 15,000 wage. Surprisingly this announcement doesn’t allow me to be happy.
Why it won’t make any significant impact:
1) The major reason is inflation. If a person migrates to any Indian metropolitan city the inflation is always higher than the tier 1 and tier 2 cities. And let’s admit majority of the jobs are always in Metro cities.
2) Industries will always find flaws in the system and get rid of this minimum wages act. The biggest culprit will be ‘corruption’. It’s a harsh reality and I am not pointing to any government or company.
3) Exorbitant rentals munch our salary anywhere between 30% and 50%. You’ll also agree with me that India is still the lowest salary paying country even considering the new changes that come in Minimum Wages Act.
4) Majority of the middle class families’ incomes always go towards paying loans (education, home and other loans). People can’t save little money for their retirement. Another harsh reality.
5) All 29 states of India have their own issues. I am pulling out one major issue — UNEMPLOYMENT. For example, Human Resource jobs across India (screenshot below courtesy Naukri.com Dec 29, 2014). If I have to hunt for HR jobs across India, across all levels then on this current date we have 3241 jobs + 20% considering other job portals having other employers’ posts. Add 10% if not listed in any job portals.
Now if we take the CAT aspirants who appeared in 2012 and completed or are completing their MBA in 2014/15 then we will have a staggering two lakh students passing out this year. If we consider that 10% of students want to pursue HR as a career, then the number is still very astonishing. So you have a clear answer, supply is very high and jobs are very limited.
What the Modi Government should do?
1) Like USA, Canada and other developed countries, we should also start paying per hourly basis and make per hour Minimum Wage law/Act.
2) Every Year, each state Government should review inflation rate and Minimum wage, and announce the new minimum wage at the start of the every year. This automatically translates into more savings for the people.
3) Every year the Central/state government should check which sector is growing which isn’t and do the balancing act. Because of that each individual gets a chance to work in their state. For example, Human Resource, Gujarat, might have lowest job openings in HR but have more manufacturing jobs. What should be done to increase jobs in other categories? The government should find and solve the issue.
4) Have to have a defined law of minimum wages till senior level jobs as this will help employers / employees to decide the opportunities.
Compare the salary structure of a five-year experienced person in tier 1 cities for example Ahmedabad vs Lucknow, and you’ll get the answer.
5) Lastly, bring more jobs, create more jobs, create more ‘Vibrant Gujarat’ Summit Movements (every year, every state should do). This will bring significant investments and ultimately growth.
Most importantly this is a real perquisite for blue collar jobs. Since our Independence, they have been working hard and are paid less than even a roadside beggar.
This article wouldn’t be complete without thanking YourStory.com team for publishing first and make it big & louder.
About Me:
Hiranand Chawla, I am ex-entrepreneur with 7 years of experience in the recruitment industry. I can be reached at hiranandchawla@gmail.com.
Twitter Handle: @hiranand
asha chaudhry
interesting topic to touch hiranand.
i think inflation is definitely killing the middle class. unlike countries in north america, a major slice of our earnings goes to GROCERIES!
let’s hear what others have to say….
Hiranand Chawla
.And more importantly Indian salaries are far lesser than these Countries. Hourly Minimum Wages make more sense…
Yep, let’s hear what others have to say.. :p
Aman Jha
I think increasing everyone’s salary at the same time to 15k or any damn amount won’t help. Production and service cost will go up proportionately as well and in turn rise in inflation, more money in the system.
People working currently below 15k won’t reap much benefit out of it but the people who are working currently at more than 15k will definitely be affected adversely. Because their salary won’t increase but as the labour cost has gone up, they will face inflation and high prices.
Amit Shroff
Hiranand liked your article.
But I really don’t know what change will it bring to society, Since I strong believe that education sector need to change and government need to make policies for it, you will only get paid well if you are well educated, additionally there should be slab based on skills. Like you would get a Marketing Exe at 10k but a full time domestic help would cost you Rs 15k. But then if the domestic help keep working for another 5 years his/her income with grown to max 20k, but if a MBA do a good job, his salary can increase to 50k. So all these factor should be taken care. The initial low salary is basically the investment that the company is making on the candidate, where security is min, like I train a candidate for 1 year and he leaves the company because now he is being paid 2 or 3 times of what I am currently paying him.
So coming back to my point most MBA Collages, BTech / Mtech / Institutes like Arena, NIIT its all about making money and degree. I have been interviewing people for skills like PHP Development, HTML Development, BD etc the knowledge they bring in after completing there degree or course is very poor. The success rate in portal like naukri is between 0.5 to 1%. Else you would notice that unemployment would increase with this act.
Additionally, there should be min rate define for service sector as well like if you look at my industry i.e. Website Design & Development you would find multiple vendors charging from 2500 to 2,50,000 +. The competition is very high on start-up level where start-up like us are competing with FREELANCERS.
Last meet when I meet one of my new client, he praised me for the quality of work we had delivered, my immediate response was, that its because the project was allocated to us, but the initiation comparison was just cost and he agreed to it.
So entire system will have to change, I don’t mind paying a candidate min Rs 15000/- but he should do justice to his work and I should be paid well to pay off to my employees.
Hiranand Chawla
That’s how RBI & Govt comes into this picture.. The only thing is to increase the 15k minimum wage is doing it step by step.. And If they can come up with Hourly wage that will be a boon for India.