The Minimum Wage Checker of WageIndicator: a Note

By Biju Varkkey, Indian Institute of Management Ahmedabad and Khushi Prakashchandra Mehta, WageIndicator manager Asia, global manager Minimum Wage-database

In recent years, there has been growing interest in the role of Minimum Wages in improving the lives of low-paid workers, as well as in rebalancing national economies. The issue of minimum wages has often been a subject of discussion among union leaders, employers and labor relations experts across India. While Minimum Wage legislation (Minimum Wages Act 1948) has to a large extent been effective in providing protection for workers in both the organised sector and unorganised sectors, its effectiveness as a labor market instrument as well as method to ensure decent work conditions has continuously been questioned.   

The Minimum Wage Collection Started in India Ten Years Ago

While studying wages in India, particularly in its unorganized sector, we came across sufficient literature that covered Minimum Wages in India, its functioning, issues and concerns. The existing system had become complex, because of the unique system that allowed both central and state government interventions in setting and administering it.  Since India does not have a formal wage policy,  the Minimum Wage system is considered as the basic framework to work with. Hence understanding the same in a better manner was important.

To understand the working of Minimum Wage in India better, we wanted to study the Minimum Wage trends in Indian states. However, soon we realised the data on wages was not easily available. Though the Labor Ministry (part of the central government) collects, compiles and publishes Minimum Wage rates of all Indian states, the data is often outdated or missing. It is only in recent years that state governments started to publish Minimum Wage notifications on its websites. But way back in the year 2006, this was not the scenario. Also, each state publishes the information in its regional language, which makes the comprehension difficult for people of other states.

A Minimum Wage Notification copy is a public document which can and should be easy to access. However, we found that one has to make a formal request to the labor department to be able to access the copy. The whole process of getting access to the data can be very tiring. At the same time, violation and non-payment would put the organization and/or employer at risk.

What further hampered the understanding of the Minimum Wage system in India was the complexity of structure and process. Since every state in India has independence to review and revise Minimum Wages based on various factors such as costs of living, regional industries' capacity to pay, etcetera, there is no single uniform Minimum Wage rate across the country. As a result, the wage rates in scheduled employments differ across states, sectors, skills, regions and occupations. In addition to the complex Minimum Wage system and structure, lack of reliable and easily accessible information was one of the compelling factors in creating a Minimum Wage inventory and publish it on the Indian WageIndicator: www.paycheck.in.

In the year 2006, we started collecting statewise Minimum Wage data in India. The process was not easy. The Labor Department in each state and in the Government of India (GOI) were contacted with a request to send wage data. In some cases, personal visits were made to ministries. Few states happily obliged, while others were unwilling to provide the data. It was only by 2008 that we were able to build cordial relations with labor departments, such that they themselves sent us information as and when wages were revised in their respective state. The inventory built over the ensuing 10 years, has helped us to undertake various studies on time series and wage trends in India.  Soon Minimum Wage became one of the most frequently visited sections on the Paycheck website, thereby increasing our web traffic. 

Minimum Wage Diversity and Statistics from around the World

Minimum Wage diversity and complexity makes Minimum Wage study difficult. For example, in countries that have a Minimum Wage, the wage fixing system differs according to objectives and criteria, machinery and procedures, coverage, and subsequent adjustment as well as the operation and enforcement of rules established. In many countries, Minimum Wages are set by a tripartite committee or commission comprised of representatives from workers, employers, and the government, while in others they are set by executive decree or legislative actions1. There are countries like Italy and Finland where minimum wages are set solely through collective bargaining. Levels at which wage rates are determined also differ country-wise. Rates can be national, regional, occupational, industry, per sector or sometimes as per specific categories like skill level or district level. There are countries that calculate wages on a monthly basis, while others calculate on hourly, daily, weekly, and monthly basis.

Also, to study wage trends across industries and to compare and analyse wages prevailing in a particular country, the availability of accurate and reliable wage information is important.  However, a similar situation was observed in many other countries where such data was rather scarce and its accessibility close to nil. In many developing countries, wages are not published on any government website. As a result, someone from India or Australia may not be able to know the wage rates in Rwanda, Niger or Guinee.

Complex structures, vast diversity, inaccurate and non-available Minimum Wage data, led to expanding the Minimum Wage inventory from India to all WageIndicator countries. Hence, a global Minimum Wage inventory was designed and started to be built which provides a comprehensive overview of Minimum Wage rates, legislation and wage trends under one website.

Towards a Global Minimum Wage Database

Over the years, as the number of participating countries increased, managing and maintaining Minimum Wage information in Microsoft office excel sheets became difficult. To manage data of 83 countries, a database management system was required which could make the process of storing, modifying and extracting information easy.  At the same time a tool was required that could create synergy between Minimum Wage information and other WageIndicator tools like the Minimum Wage compliance form, wages in context, the cost of living survey, publications etcetera (see figure 1).  

Figure 1: Database and Synergy with other Online Tools

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The objectives behind creating a Global Minimum Wage Database were:

  • Make it user friendly and; 
  • Project a rather complex Minimum Wage structure from different countries in a simple and easy to understand format;
  • Provide information relating to minimum wage rates and legislation;
  • With the help of these previous points support and guide trade unions and employers in Minimum Wage compliance.

 

Benefits of System Control were:

  • Better information and data management: databases makes the process of storing, modifying, and extracting information easy and less time consuming.
  • Ease of Research: centralized data-source for Global/National Minimum Wage Reports.
  • Cost Benefit, i.e. maintaining, controlling and managing bulk data is cheaper and faster.

 

Currently, the database has Minimum Wage information for 83 countries: Africa – 26; Americas – 14; Asia – 9; Europe – 29 and NIS countries - 5.  The information is published in English at www.wageindicator.org and in the national/regional languages on the WageIndicator country websites. Minimum Wage rates are published in the national currency and as per the international standards to enable clear understanding of rates by the national as well as international web visitors.

Minimum Wages are collated, verified and maintained by WageIndicator teams around the world in close cooperation with the Indian Institute of Management in Ahmedabad and the University of Amsterdam/AIAS. The team updates the Minimum Wage Database on a regular basis and provides up-to-date information to its readers. Once the information was uploaded on the website, we saw a trend similar to India. After the system got introduced the website traffic in all countries went up. This clearly shows that there was an information gap in the labor market, that WageIndicator websites were successfully bridging.

Database: Present and Future Uses

The Global Minimum Wage Database is unique in more than one way. It enables comparison of Minimum Wages within a country and amongst countries. Since the Minimum Wage database is linked to other databases, like those for labor law and Collective Bargaining Agreement (CBAs), comparison of Minimum Wage with CBAs, legislation or living wage (WageIndicator has living wage information for over 100 countries) becomes easy. For example, by using the Wages in Context-map (see fig 2), one can compare the Minimum Wage and living wage in a particular country.

Figure 2: Minimum Wage and Wages in Context-map

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Our research showed when it comes to enforcement, or Minimum Wage compliance, many countries do not have a system to record the number of inspections conducted, violations detected and action taken against non-compliance. Hence, with the help of the Minimum Wage database, a wage compliance form has been built (see fig 3).

The compliance form is linked to the Minimum Wage and Labor Law databases, which enables automated calculation. In case an employee/worker is not getting the statutory Minimum Wage, they can file a complaint using the compliance form built by WageIndicator. One has the option of filling the form online and submit it or take a print and send it to their respective trade union office or labor inspector. The form has proven to be helpful in many countries where wage compliance has been and continues to be a big concern.

Figure 3: Automated Minimum Wage Compliance Form

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Compliance with labor law is the first step to decent work. Knowledge of and awareness about laws helps to comply with the law. Hence in the coming years focus will be on improving the Minimum Wage database and include wage information of more countries. Such information facilitates comparative studies on Minimum Wage systems and the role of labor relation actors and can thereby help to raise awareness of and commitment to Minimum Wages and living wages at different levels in many countries across the globe.


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