Minimum Wages Rate in India Vs. USA

Financial management

Minimum Wages Rate in India Vs. USA

Below is some short analysis of comparison of minimum wages rates in India and USA:

Minimum wage in USA

In USA, there is dual minimum labor wage system:

  1. Federal Minimum Labor Wage.
  2. State Minimum Labor Wage.

In the 50 states and one DC (District of Columbia), separate minimum wage is declared. If in a state minimum wage to declared is less than the wage declared by Federal then Federal rate shall apply in that State. As on 1st January 2016:

  1. Federal Minimum wage rate in USA is $7.25 per hour.
  2. In 29 states and in DC, the minimum wage is higher than the federal.
  3. District of Columbia has the highest wage rate of $10.50 per hour.
  4. In 14 States of USA, minimum wages is equal to that of federal.
  5. In 2 states, minimum wages is less than Federal, Hence minimum wages of federal will  apply in these states.
  6. In 5 States of USA, Minimum wages is not declared Hence minimum wages of federal will apply in these states.
    Note:
  1. In Eleven states of USA minimum wages in linked with consumer price index.
  2. For a work over maximum permitted hours per day/week, wages at double rate is paid.
  3. American Samoa and the Commonwealth of the Northern Mariana Islands have special minimum wage rates Hence Federal minimum wage rate will not apply in these territory.

Minimum wage in India:

In India Minimum wage is governed by Minimum Wages Act 1948. Every state decide its minimum wages for unskilled and skilled worker which may vary on the basis of type of industry. For Example:

For Example : MINIMUM WAGES in Haryana And Uttar Pradesh is:

Category of Workers Uttar Pradesh (as on 01.04.16)

Rs. per day

Haryana (as on 01.01.16)

Rs. Per day

Unskilled 273.37 293.11
Semi skilled A 300.11 307.78
Semi skilled B 300.11 323.15
Skilled A 347 339.33
Skilled B 347 356.29
Highly skilled 407 356.29

Govt.of India plans to increase Minimum wages of labor in India to Rs. 10000/- at national level taking into consideration consumer price index and Dearness allowance. To improve the conditions of labor at national level, overall minimum limit is to be declared to supersede minimum wages limit of states.  Govt. decides to make changes to rule 25 of the Contract Labor (Regulation and Abolition) Central Rules.The Minister of State for Labor and Employment informed Lok Sabha that the wage hike has been done based on a Supreme Court verdict.

Considering the wage security for the contract workers, proposal for minimum wages of Rs. 10000/- for contract workers, was under consideration of the Government. After due deliberation, a draft Notification for amending Rule 25(2)(iv) of the Contract Labor (Regulation & Abolition) Central Rules, 1971 has already been issued to give effect to the above stated objective and comments of stakeholders were solicited vide Notification No. G.S.R. 368(E) dated 30.03.2016. All comments/suggestions received from stakeholders within the prescribed time limit are under examination. The final notification will accordingly be issued after consideration of the suggestions and approval of the competent authority.

(Notification for increase of Minimum wages w.e.f. 19.01.2017 has been issued by Ministry of Labour and Employement on date 19.01.2017: Click here to Download Notification)

Comparison of Minimum Wages of India & USA

For Example: A unskilled labor worked for 8 hour a day for one month

In India(Uttar Pradesh): 273.37 X 26 = 7108/-

After implementation of new min. wage it is 10000/-

In USA (Federal Rate): $7.25 X 8 X 26 =$1508/-

In Indian currency 1508 X 68 = Rs. 102544/-

 But cost of living in USA is much higher than in India. As per a report:

  1. Consumer prices in USA are 195% higher than in India.
  2. Consumer prices including Rent are 250% higher than in India.