India Can No Longer Afford to Overlook Its Minimum Wage Problem

Labour unrest was suddenly in the spotlight in the industrial township of Noida, Uttar Pradesh, on April 13–14, turning violent as tens of thousands of workers took to the streets over minimum wages. The law-and-order situation was contained through a flag march and heavy security deployment, and the state government announced an interim wage increase pending the constitution of a Wage Board.

The protests were not without genuine cause. The current minimum monthly wage for unskilled workers in UP stands at a meagre ₹11,313.65. Workers receive a variable dearness allowance twice a year as a supplement, but basic pay for unskilled workers in rural areas remains ₹5,750 a month, a figure that has not been revised since at least 2016, while skilled workers can expect a monthly minimum of ₹13,940.37 including VDA. The 37 paise, one assumes, is essential to employer competitiveness and cannot be rounded up.

Even these rates are not uniformly observed. Skilled workers frequently receive the same pay as unskilled ones, and employers routinely dismiss and rehire staff to avoid annual increments. Faced with 45,000 protestors blocking traffic and pelting stones, with the administration evidently caught off guard, the UP government announced an interim increase of 9% for workers in non-municipal areas, 21% for those in Noida and Ghaziabad, and 15% for workers in municipalities, all well short of what workers demanded.

Similar unrest has played out across several industrial areas in Barauni, Surat, Panipat, and Manesar recently. Workers had pinned hopes on the four Labour Codes coming into effect on 1 April 2026, expecting higher benefits given rising inflation and LPG prices.

Widening Gap
Even in the more industrialised and prosperous state of Maharashtra, the monthly minimum wage for unskilled workers in Zone III areas rose from ₹8,764 to ₹12,728 between 2020 and 2026. While the increase of 45% is significantly higher than in UP, it is hardly sufficient as a living wage for a family of five. In fact, it sits below the World Bank's poverty line of $3 per person per day.

At the central government level too, minimum wage increases have been lower than expected. It was last revised in 2017 across designated occupations such as agriculture, mining, construction, sweeping and cleaning, and others. For example, for construction workers in Category C areas, the basic daily wage was revised from ₹120 to ₹350 in 2017. Despite the variable dearness allowance being offered twice a year, an unskilled worker in the construction industry in a Category C area can today expect a daily wage of ₹556, up from ₹427 in 2020. Similarly, a highly skilled worker in a top Category A area in the same industry can earn ₹1,094, a slow pace of increase of about 30% over more than five years.

The new Code on Wages 2019 makes minimum wages a statutory right for all employees and commits to a statutory floor wage pegged to minimum living standards, below which states cannot set their own rates. Wages are to be reviewed every five years or sooner, with states required to account for skill levels, geography, and working conditions.

However, states have responded with complexity rather than clarity. Andhra Pradesh, for instance, notified approximately 70 occupations in detail, referencing original notifications from 2011 and CPI base years going back to 1982, linked to CPI figures as of October 2025. In general, the complicated nature of wage setting in India subjects employees to incomprehensible wage differentials and deductions while presenting complexities and compliance issues to employers.

The floor wage to be set by the central government must be substantive enough to ensure dignified emoluments to workers. It should account not only for food, clothing, and housing, but also for transport, healthcare, communication, and education for a household of reasonable size.

State-level wages, while meeting or exceeding the national floor, should be simple in structure and differentiated by skill level and region rather than fragmented across dozens of industry sectors. Robust worker grievance mechanisms are equally necessary, so that violations such as delayed payments, suppressed overtime, and unlawful deductions do not go unaddressed.

India's wage structure has a direct bearing on labour force participation, aspirational mobility, and social cohesion. Establishing a minimum wage structure that affords a decent quality of life to its workers and ease of doing business to its employers will be a complex challenge. But the central and state governments have little choice. If minimum wages continue to lag this far behind the cost of living, Noida will not be the last time India's industrial belts grind to a halt.