Informal workers’ wages have witnessed steeper cuts than formal workers in recent times even while countries have deferred the minimum wage hike in the times of COVID-19 pandemic, according to a recent report by the International Labour Organisation (ILO), which said formal workers’ wages have been cut by 3.6 per cent, while informal workers have seen a 22.6 per cent cut.

In two-thirds of countries for which official data was available, the crisis is likely to inflict massive downward pressure on wages in the near future, ILO said. The wages of women and low-paid workers have been disproportionately affected by the crisis.
“It is worth noting that in other countries, delayed increases or freezes in minimum wages because of the COVID-19 crisis have taken place at the local or sectoral level,” the United Nations organisation said in its Global Wage Report 2020-21, citing the example of Punjab, where it said the local government reversed its order announcing a minimum wage increase.

In countries where strong measures were taken to preserve employment, the effects of the crisis were felt primarily as falls in wages rather than massive job losses, it said.

The crisis has also affected lower-paid workers severely. Those in lower-skilled occupations lost more working hours than higher-paying managerial and professional jobs. Using data from the group of 28 European countries the report shows that, without temporary subsidies, the lowest paid 50 per cent of workers would have lost an estimated 17.3 per cent of their wages.

Without subsidies, the average amount of wages lost across all groups would have been 6.5 per cent. However, wage subsidies compensated for 40 per cent of this amount, ILO said.

Hailing the provisions of Code on Wages in India, ILO said its implementation will reduce the number of rates to a minimum of four and a maximum of 12 per state and is intended to make the wage-setting process in India more efficient and dynamic.

According to ILO, in India each state used to set different minimum wage rates for employees in each occupation and in ‘scheduled’ employment.

This gave rise to over 1,915 occupational minimum wage rates across state spheres and 48 minimum wages in the central sphere, it said, citing the Economic Survey 2019–20 which covered two thirds of all wage earners.

“The implementation of the Code on Wages will reduce the number of rates to a minimum of 4 and a maximum of 12 per state and is intended to make the wage-setting process in India more efficient and dynamic,” it added.