7th Pay Commission: National minimum wage is not Rs 18,000, fitment factor to rise

The minimum wages will vary from place to place depending upon skill required, arduousness of the work assigned and geographical location,

Following the recommendations of the 7th Pay Commission being approved by the Union Cabinet, there is a big possibility of the minimum basic pay being hiked along with a proposal to raise the fitment factor.

In another development the government has clarified that the national minimum wage will vary and has not been fixed at Rs 18,000 per month. This is a significant development and you could read below what the government has to say on this.

Minimum pay will vary

In a press release, the Ministry of Labour and Employment clarified that the government has not fixed the national minimum wage at Rs 18,000 per month. Interestingly when the government had approved the recommendations of the pay panel, the minimum wage that was fixed was at Rs 18,000. The government however made no reference to the pay panel's recommendations or the Cabinet approval regarding the same.

What is the national minimum wage

Recently, some news reports have been published regarding the fixation of minimum wage as Rs. 18000/- per month by the Central Government. It is clarified that the Central Government has not fixed or mentioned any amount as "national minimum wage" in the Code on Wages Bill 2017. The apprehension that minimum wage of Rs. 18000/- per month has been fixed for all employees is, thus incorrect, false and baseless.

How minimum wage will vary

The minimum wages will vary from place to place depending upon skill required, arduousness of the work assigned and geographical location," read the statement released by the Labour and Employment Ministry. Some reports have also been appearing in the media regarding the revised methodology for calculation of minimum wages by enhancing the units from three to six. It was purely a demand raised by Trade Unions in the recent meeting of the Central Advisory Board on Minimum Wages. However it is clarified that such proposal is not part of the Code on Wages Bill, the government also said.

Fitment factor under 7th Pay Commission

The government is now contemplating raising the fitment factor to three times. The government while clearing the 7th Pay Commission recommendations had fixed the minimum pay at Rs 18,000, keeping in mind the fitment factor at 2.57. The Unions have however been demanding a 3.68 per cent fitment factor. The minimum pay was fixed at Rs 18,000 by the finance ministry last time. The basic pay was kept at Rs. 7,000. They multiplied it by 2.57 fitment factor, which came to Rs. 18,000. However, if the government gave a go ahead signal with the 3 fitment formula, the number will change to Rs 21,000.

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