1. Trends in Minimum Wage Laws and Implementation Experiences of selected Asian Countries (& Case of India)
Biju Varkkey
Faculty, HRM Area
Indian Institute of Management
Ahmedabad, India
Rupa Korde
Faculty, Economics Area
FLAME University
Pune, India
Sunny Wadhwaniya
Research Associate,
Indian Institute of Management
Ahmedabad, India

2. Introduction The Concept: Minimum Wage
The minimum amount of remuneration that an employer is required to pay wage earners for the work performed during a given period, which cannot be reduced by collective agreement or an individual contract (ILO).
Why Minimum Wage matter?
An effective tool to reduce wage inequality and poverty
To safeguard the income and provide decent standard of living to low skilled workers
Minimum Wages Legislations are crucial:
Protection for low-wage workers
Ensure payment of fair wages
Provide a basic floor wage
Instrument of macroeconomic policy

3. Select Literature Review1
Jones 1997;
Strobl & Walsch, 2001
They note that the presence of legal mechanisms does not guarantee an effective implementation of minimum wage policy
in a country.
In order to have an effective implementation of the minimum wage policy, the traditional top down approach, found in most legal mechanisms should be avoided 2
Raustiala & Slaughter,
(2002)
The authors argues that if the implementation of minimum wage legislation is effective, it will automatically lead to a better
compliance of minimum wage legislation in a country 3
Benassi (2011)
Has identified and evaluated various MW implementation schemes.
Emphasised that the issue of MW implementation is considered important both at the academic and political levels.
Pointed out the documenting the issues faced during implementation and compliance of the policies are ignored. 4
Ra, (2014)
Has presented major trends and issues of MW implementation in major South-East Asian countries.
The major finding of the study is; political and non-economic factors do play a major role in the implementation of MW
regulation. 5
Bhorat, (2014)
Identified one of the major issues related to enforcement and compliance of minimum wage regulation is ‘measurement’
particularly the measurement of noncompliance and enforcement.
The study suggests that there should be an index of minimum wage violation which would enable policymakers and
researchers to analyse the level and depth of non-compliance.
However, better compliance and enforcement is very difficult when minimum wage regulations are complex. 6
Varkkey (2015)
The study looks at the implementation of MW Act in India.
It notes that the implementation of the MW act is problematic because of its highly complex structure, albeit the fact that
there are institutional mechanisms to ensure payment of wages, but the effectiveness of those mechanisms is rather
questionable.

4. Research Gaps
Many Asian countries are largest single contributor to global growth (60% as per ADB, 2017). In spite of
such unparalleled growth, labour advocates are struggling to ensure protection of workers’ rights, including providing them with minimum wage
Vast differences in the minimum wage policies and regulations, as well as implementation difficulties. Hence, in most of Asian countries, minimum wage systems have been a subject of debate and criticism owing to its complicated structure. The major reason for such complexities may be found in the foundation of minimum wage systems, i.e. minimum wage fixing procedure and criteria used.
Large body of research on the trends in implementing minimum wage regulation in developing countries.
The studies covered few parameters - hence they’ve failed to provide a holistic solution. Few studies (Upadhyaya,2012; Ra,2014; Ford, 2017) have addressed the aforementioned
issues in Asian Countries. This gap in literature has prompted our study.
Comparative analysis of minimum wage laws and implementation mechanisms in Asian Countries under the WageIndicator project, i.e. including Cambodia, China, India, Indonesia, Pakistan, Sri Lanka and Vietnam are covered.

5. Inputs from Country Teams from 7 countries covered in this study
Methodology
Used data / information available from WageIndicator.org Minimum Wage Database
Inputs from Country Teams from 7 countries covered in this study
Desk research by Paycheck India team
Dichotomous Coding (Y / N) for each parameter under consideration
Development of a grid

6. Sri Lanka India Pakistan Vietnam Cambodia Indonesia China 1941 1948
Evolution of Minimum Wage Legislation in Asian Countries
Sri Lanka
India
Pakistan
Vietnam
Cambodia
Indonesia
China
1941
1948
1961
1994
1997
2003
2004
Sri Lanka Wage
Ordinance Board
India Minimum
Wages Act
Pakistan Minimum
Wage ordinance
Labour Code
Cambodia Labour
Law provision on Minimum
Wage
Legislation on
Minimum
China Provision
on Minimum
2016
2017
2018
2012 -
National Minimum Wages
Act No. 3
Budgetary Relief Allowance
of workers Act No.4
The Code on
Wages Bill
Sindh Labour Policy
Vietnam Labour
Code
(amended)
National minimum wage law

7. Types and Combinations of Minimum Wage Fixing approaches/methods
Minimum Wage fixing method in Asian Countries
Types and Combinations of Minimum Wage Fixing approaches/methods
One minimum wage rate for the entire country or bipartite/tripartite body as decision making body
Multiple minimum wage rates for sector and/or occupation, agreed by State or Bipartite/Tripartite body
One minimum wage rate for the country agreed by the process of collective bargaining
Multiple minimum wage rates for sectors and/or occupations agreed by the process of collective bargaining

8. Parties involved in Minimum Wage Fixing and Adjustment
Minimum Wages fixed
by Government
Minimum Wages fixed by specialized bodies
Other procedures
(Collective Bargaining)
Minimum Wage
Fixing Body
No obligation to
consulting
partners
After direct
consultation with
social partners
After recommendation
/ advice from social
partners
Role of Social
Partners
Countries

9. Specialized Bodies Involved
Specialized bodies involved in Minimum Wage Fixing Process
Country
Specialized Bodies Involved
Cambodia
Labour Advisory Committee (tripartite)
China
China Entrepreneur Association
All-China Federation of Trade Unions
India
Advisory Board and Committees (bipartite)
Indonesia
National Wage Council (Provides national wage policy advice - tripartite)
Provincial Wage Councils (Advise provincial governors, who determine minimum wages - tripartite)
District/City Wage Councils (Advise provincial governors, who determine provincial minimum wages - tripartite)
Pakistan
Provincial Minimum Wages Boards (bipartite)
Sri Lanka
Wages Boards (Workers in certain trades)
Remuneration Committees (tripartite)
Vietnam
National Wages Council (tripartite)
Source: Varkkey, Korde & Singh,2016

10. The Criteria for Fixing
Criteria for Minimum Wage fixing in Asian Countries:
Criteria considered in determining the level of Minimum Wages
(ILO Minimum Wage Fixing Convention, 1970 (No.131,Article :3)
Criteria for fixing Minimum Wage fixing in Asian Countries
Social Group:
Considers the basic needs of the workers.
The needs of workers and their families
General level of wages in the country
Relative living standards of other social groups
Social security benefits
Economic Group:
Considers the country’s economic constraints.
Economic development
Productivity of the workers
The Criteria for Fixing

11. Legal Criteria for Minimum Wage fixing in Asian Countries:
Cost of living
index
Level of
Wages
Needs of
Workers &
their families
Level of
Employment
Social
Security
Benefits
Productivity of Labour
Enterprises' ability to pay
No set
criteria

12. Present status of selected Asian Countries
Frequency of Minimum Wage Adjustment:
ILO Convention No. 131 (Article 4): - Minimum Wages should be "adjusted from time to time”
ILO Minimum Wage Fixing Recommendation, 1970 (No. 135) :- “Minimum wage rates should be adjusted from
time to time to take into account changes in the cost of living and other economic conditions.” In principle, this revision can take place “either at regular intervals or whenever such a review is considered appropriate in the light of the variations in a
cost-of-living index”.
Present status of selected Asian Countries
Annual Adjustment
Every 2 years or more
Flexible

13. Some Interesting Facts about Minimum Wages in Asian Countries:
In Vietnam, there are two types of MWs; general MW for public servants & armed forces and the regional MW for private & other sectors.
Since, 2010, Vietnam has a universal coverage of MWs for all workers; including informal
workers.
Some Interesting Facts about Minimum Wages in Asian Countries:
China does not have a national MW rate, instead MWs are set at province & sectoral level.
Pakistan are MWs at
provincial &
occupational level.
In India the MW is set as per piece rate, monthly, daily and hour rate.
It is decided on a central,
regional, & sectoral level.
India has about 1700 MW rates.
In Cambodia, MWs are set for all apprentices, probationary & regular workers.
MW only for garment & footwear sector
In Indonesia, provincial MW is set based on the negotiations & agreements between three key actors, i.e., corporate organizations, trade unions & the Governor.
In Sri Lanka, MWs are set as per sector & industry by Wage Boards
Sectors that are not under the Wage Boards are not covered by MWs
MWs have not been revised for almost a decade

14. Reforms in Minimum Wage framework in India
Case study of Wage Code Bill, 2017
Aims
To ensure a universal MW for all industries & workers.
To improve the living standard of workers
Coverage
All industries & workers, including those getting higher than INR 18,000 (irrespective of workers' pay)
40 crore (140 million) workers will be covered
Implementation
44 different labour laws will be condensed into 4 sections
wages
industrial relations
social security & safety
health & working conditions
Amalgamation
Bill seeks to amalgamate 4 laws
Payment of Wages Act 1936
Minimum Wages Act 1948
Payment of Bonus Act 1965
Equal Remuneration Act 1976
(+) Impact
Will generate employment & attract entrepreneurs
Simplify understanding of MW in India
(-) Impact
Steep hikes in wage rate might have a negative impact on hiring in tier II & tier III cities
Hiring at entry level might be hindered due an increase in compensation cost to the companies

15. Conclusion
There are sufficient commonalities and differences that could be observed in the minimum wage fixing criteria
and procedures among the seven countries.
Even though Asian countries share some commonalities in terms of minimum wage fixing methods and
background, diversity exists among them at various levels.
The one positive trend seen in all countries is that they believe in minimum wage to be a powerful
labor market stabilizing tool and have adopted suitable methods that allow labor and employer
representation in the fixing process.
The negative trend of this is seen in the declining involvement of Trade Unions along with the fading use of collective bargaining as the mechanism for minimum wage fixing.

16. Thank You Sunny Wadhwaniya Research Associate,
Indian Institute of Management
Ahmedabad, India
Biju Varkkey
Faculty, HRM Area
Indian Institute of Management
Ahmedabad, India
Rupa Korde
Faculty, Economics Area
FLAME University
Pune, India

17. Description Countries
Commonalities and Differences in selected Asian countries:
Indicators
Description
Countries
History of development
and the
colonial background
Not all the seven countries share the same colonial background
India and Sri Lanka are early adopters of minimum wage system
China being possibly among the last adopters of minimum wage system
Presence of multiple
wages
Different wage rates for different regions
China & Indonesia
Different wage rates for different sectors and occupations
Cambodia
Regional, Sectoral and Occupational wage rates
India, Pakistan and Sri Lanka
Setting of minimum
wage rates
MW is fixed by Government or bi/tripartite bodies
China, Cambodia, Indonesia, India, Pakistan, Sri Lanka
Collective bargaining
India and Pakistan
Criteria for fixing
minimum wage
Needs of workers and their families
Cambodia, Indonesia
Cost of living
Cambodia, China, India, Indonesia, Pakistan, Sri Lanka
Level of wages and income in the country
Cambodia, China
Social Security benefits
Economic development
Cambodia, China, Indonesia, Pakistan
Inflation rate
level of employment
Cambodia, China, Indonesia
Periodicity of minimum
wage revision
Annual Adjustment -
Once every two years
China, Pakistan
Specific time period for adjustment
Once in five years
India
No Schedule frequency of adjustment identified
Indonesia, Sri Lanka
Source: Varkkey, Korde & Singh,2016