Minimum wages and the floor wage under the Code on Wages
Why in news: The Labour Bureau's orders of 30 September 2026 revised the Variable Dearness Allowance in central-sphere minimum wages from 1 October 2026.
Under the Code on Wages, 2019, every employee has a statutory right to a minimum wage, fixed by the Centre or a State by skill category and area, and never below a national floor wage set under Section 9. The Labour Bureau's orders of 30 September 2026 raised the Variable Dearness Allowance in central-sphere rates from 1 October 2026.
Syllabus: GS3 · Indian Economy & Growth; GS3 · Inclusive Growth; Prelims · Economy & Social Development
Why this matters for UPSC
Minimum wages sit in GS3 (employment, inclusive growth) and GS2 (welfare of vulnerable sections). Prelims can ask who is the appropriate Government, what Section 9's floor wage is and who compiles CPI-IW; Mains, whether the Code secures Article 43's living wage.
In short
A minimum wage is the lowest pay the law allows; the Code on Wages, 2019 makes it every employee's right, set by Centre and States above a floor wage.
The Code has built the legal ladder; its worth now rests on a regularly revised floor wage and on enforcing rates for casual, cash-paid workers.
Why it matters
A construction labourer in Delhi, a security guard in Patna and a farmhand in a small town each have a legal daily wage that no employer may go below. Because the dearness part moves with prices, that wage rises when food and rent cost more, without waiting years for the basic rate to be revised. The floor wage matters most to workers in poorer States: it stops a State from drawing factories by keeping pay low. The larger question is whether a legal minimum becomes the living wage that Article 43 of the Constitution asks for, when casual, cash-paid work is hard to inspect and many workers never learn what their rate is.
Prelims pointers
- Section 2(d), appropriate Government: the Centre for railways, mines, oil fields, major ports, air transport, telecom, banking, insurance and CPSUs; the State elsewhere.
- Section 6(6): rates fixed primarily by skill (unskilled, semi-skilled, skilled, highly-skilled), geographical area, or both; arduousness may be added.
- Section 8: a committee with equal employer and employee members and independents up to one-third, or a draft open two months; revision ordinarily within five years.
- Section 9: different floor wages may be fixed for different areas; the Centre may seek the Central Advisory Board's advice and consult States first.
- Section 42, Central Advisory Board: employers and employees in equal number, independents up to one-third, five State Governments; one-third women; an independent member chairs.
- Labour Bureau: set up in 1920 and now based at Chandigarh; besides CPI-IW (2016 base series since September 2020) it compiles CPI for Agricultural and Rural Labourers.
- Seventh Schedule, Concurrent List: Entry 22, trade unions and industrial disputes; Entry 24, welfare of labour including conditions of work.
- Article 43 (Directive Principles): the State shall endeavour to secure a living wage to all workers; Article 39(d): equal pay for equal work for men and women.
Practise a UPSC-style question
With reference to the floor wage under the Code on Wages, 2019, consider the following statements:
1. The floor wage is fixed by the Central Advisory Board constituted under Section 42 of the Code.
2. The Central Government fixes the floor wage taking into account the minimum living standards of a worker.
3. Different floor wages may be fixed for different geographical areas.
Which of the statements given above is/are correct?
- (a) 1 and 2 only
- (b) 2 and 3 only
- (c) 1 and 3 only
- (d) 1, 2 and 3
Show the answer
Answer: (b) 2 and 3 only
Answer: (b) 2 and 3 only. Section 9 gives the power to the Central Government; the Board only advises.
Statement 1: incorrect. Under Section 9 the Central Government fixes the floor wage; the Central Advisory Board under Section 42 may only be asked for advice.
Statement 2: correct. Section 9(1) bases the floor wage on the minimum living standards of a worker.
Statement 3: correct. The proviso to Section 9(1) allows different floor wages for different geographical areas.
Eliminate: statement 1 is wrong because the Board advises and the Centre decides. Out: (a), (c), (d).
Trap: Swapped attribution. The power to fix is pinned on the advisory body that the Centre may consult, not on the Central Government itself.
Remember: Floor wage: fixed by the Centre (Section 9), may vary by area; States cannot go below it.
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