Plans are afoot to constitute a central advisory board to decide the statutory National Floor Wage as envisaged in the recently-notified labour codes.
The national floor wage will be a legally binding threshold rather than being an advisory figure, wherein all states/union territories cannot go below it while fixing their own minimum wages.
“A central advisory board is being set up comprising 15 to 20 members. It will be a tripartite composition where trade unions, workers’ representatives, government officials and private stakeholders will be members. Two to three external members will also be nominated to the panel,” an official of the Ministry of Labour and Employment told The Tribune.
He said the report submitted by an expert group led by economist and statistician Prof S P Mukherjee, in 2021, to recommend the National Floor Wage under the Code on Wages, would be considered.
Unlike the previous non-binding advisory floor level (which was Rs 178 per day), the Code on Wages mandates that the Centre sets the statutory National Floor Wage. State governments cannot set their respective minimum wages lower than this floor
The Mukherjee panel was tasked with moving beyond basic nutritional requirements to evolve a scientific, data-backed methodology for wage fixation. The committee debated utilising the multi-criteria decision making (MCDM) method, incorporating expenditures like housing, healthcare and education alongside food.
Alongside the floor wage, the committee’s mandate also included providing technical advice on standardising minimum wage criteria and offering inputs to improve social security provisions (like provident fund and ESI) for contract and informal workers.
The official also noted that the Centre is not bound to accept the floor wage recommended by the advisory board, adding that it may arrive at its own figure as well.
“The floor wage establishes a national wage benchmark that guides how minimum wages are determined across India. Rather than replacing minimum wages, it sets a baseline level of remuneration below which wages cannot fall, ensuring a uniform minimum standard of income protection for workers,” he said.
“For multinational corporations, foreign investors and domestic companies operating across multiple Indian states, understanding how the floor wage interacts with state-level minimum wage regulations is essential for labour cost planning, regulatory compliance and investment decisions,” he added.
The central government determines the floor wage based on economic indicators such as cost of living, consumer price index (inflation), minimum consumption requirements, labour productivity and regional economic conditions.
The process also draws on norms developed by the Indian Labour Conference, which recommend minimum consumption benchmarks for workers and their households.
One of the most significant reforms under the Code on Wages, 2019, is the expansion of wage regulation coverage. Earlier, laws such as the Minimum Wages Act, 1948, applied minimum wages only to certain “scheduled employments”.
The new framework extends wage protections to all employees across sectors, such as organised and unorganised sector workers, contract labour and temporary and casual workers.
This expansion significantly broadens the scope of wage regulation across India’s labour market.
Recent labour unrest in factory sectors has accelerated discussions on finalising the national floor wage. Workers have raised concerns about low wages, inflation and poor working conditions.
The demand for a higher floor wage reflects growing concerns about income inequality and rising living costs. It also highlights the need for timely wage revisions.
Experts remain deeply divided over the implementation and adequacy of India’s statutory National Floor Wage. While the government views it as a structural baseline to guarantee income security, economists and labour advocates warn that low floor levels risk creating a “race to the bottom” in progressive states.
“In a highly competitive market, the legally required national floor risks becoming the default ceiling. Industry lobbying could pressure historically progressive states with higher wages (like Kerala or Delhi) to drive wages down toward the national minimum, effectively nationalising poverty rather than elevating backward regions,” expert Arun Nayyar said.
He said a single, un-nuanced national floor wage also falls short because the cost of living varies wildly between rural areas and metropolitan cities.
Some economic surveys have also proposed dividing the country into five geographical bands to better reflect local costs, the expert added.
