India for linking minimum wages with rising prices for workers abroad

March 18th, 2008 - 12:35 pm ICT by admin  

By Devirupa Mitra
New Delhi, March 18 (IANS) India does not want to impose a minimum wage for its overseas Indian workers but is hopeful of persuading Gulf countries to introduce a system to link it to the rising cost of living so that workers are able to save enough to send back home. The issue of a minimum wage has been in the news recently, with media reports in Gulf countries blaming a series of labour strikes in Bahrain and the United Arab Emirates over an alleged plan to stipulate a minimum wage for Indian overseas workers.

The matter had reportedly escalated after the Indian ambassador to Bahrain issued a statement that employers will have to implement a minimum wage of 100 Bahrani dinars from March 1.

The Ministry of Overseas Indian Affairs (MOIA) was forced to give a clarification that India had never talked about prescribing a minimum wage for its overseas workers.

While laying down a certain limit may be out, Indian officials have been concerned that workers may be facing the sharp end of the stick due to rising cost of living.

“Workers in the Gulf are locked in a fixed wage contract. Their real wage has eroded. Therefore, his propensity to save and remit money has also decreased. Therefore, we have felt that there is a need to look at the wage structure,” a senior MOIA official told IANS.

An estimated 5.5 million Indians live and work in the six Gulf Cooperation Council countries of the United Arab Emirates, Saudi Arabia, Bahrain, Oman, Qatar and Kuwait, with a major portion of them working in the booming construction industry as contract labourers.

The issue of “neutralising” the cost of rising prices from the salary of foreign workers was first raised by Minister of Overseas Indian Affairs Vayalar Ravi at the ministerial consultation on overseas employment and contractual labour for countries of origin and destination in Asia in Abu Dhabi in January.

“We have been telling the Gulf countries not only in multilateral forums but also in bilateral forums that there is a need to revisit the issue of fair wages,” the official said.

But, at the same time, officials pointed out that wages of Indian workers could not be increased dramatically as they will lose their share of the job market.

“Basically, it’s an imperfect market, with more labour suppliers competing from different countries and also within those nations than the number of jobs, keeping the wages static,” he said.

The only minimum wages that India has made mandatory is for domestic workers that overwhelmingly relate to women working as household maids and not covered under local labour laws.

“The Philippines is the only country to announce a minimum wage for maids at $400, which we felt was too high,” said an official from the ministry.

Instead, they took the average salary of a household maid in a middle-class or upper middle class family of Rs.6,000 as the minimum benchmark, and kept on adding additional slabs to reach a final figure. “The salary limit had to be such that made it worthwhile for her to live separately from her family and also allow her to save money to remit it back home,” he said.

The MOIA had decided a range of $300-350 would be appropriate as monthly salary for maids. Most of the Indian ambassadors in the region who were given the power to decide the limit based on local conditions raised their hands in favour of the lower denomination of $300.

According to officials, India is already looking for cooperation from labour destination countries on a “unified contract implementation system”. “Sending and receiving countries (of manpower) should work together for best practices, including model contracts that set out terms and conditions fair for both employers and employees,” he said.

The ministry has been keen to develop pilot projects “to demonstrate that sending and receiving countries can work jointly and provide a framework for contractual labour”.

One of the critical components of such a system, from India’s perspective, would be to set up adequate grievance redressal opportunities. “Strikes do not just start suddenly but is a culmination of simmering discontent. Whenever there are a large number of workers, some complaints are likely to crop up. But, if there are ways to address them, then strikes or major labour actions usually do not happen,” he said.

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