Minimum Wage in India: Who is Covered?

India has overhauled its labor laws, looking to streamline bureaucratic processes, extend labor rights coverage and ultimately invigorate and modernize its economy. Part of the changes is an extension of minimum wage coverage. All employees are to be covered under a national minimum wage, not just those in occupations previously recognized under the Minimum Wages Act (also called scheduled employment). However, due to the current make-up of the Indian labor market, many workers will inevitably be left out again.

According to a working paper by researcher Mohit Sharma and Professor Brinda Viswanathan from the Madras School of Economics published in 2023, almost half of the Indian labor force is self-employed and therefore not covered under laws that stipulate employers pay their employees a minimum wage. According to the calculations presented in the paper, around a third of Indians are own-account workers, many of them in the informal sector. Around 13 percent are unpaid family workers and also exist outside the formal employment sector. Another 3.5 percent are employers themselves.

The remaining 50 percent of Indians who are employees are split down the middle into casual and salaried employees. While both have potentially already been subject to minimum wage laws if they worked in scheduled professions, oversight issues can arise especially with casual workers. The researchers further estimate that among low-skilled workers for whom minimum wages are most significant, around a third were so far not subject to mandatory minimum wages, an instance that is now expected to change.

The previous non-mandatory minimum wage floor set by the Indian government stood at 178 rupees per day ($2), but states could set their own lower minimum wages for those not covered under minimum wage legislation. In scheduled professions, many different minimum wages exists depending on location and skill set, often already reaching much higher than the national minimum wage floor.