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The global fashion business journal

Jun 16, 20247:08am

The Indian Government considers raising minimum wage despite distrust of textile industry

The recently re-elected Prime Minister of the country, Narendra Modi, has proposed an increase of up to 40% in some of the most remote areas of the country.

Jun 26, 2019 — 7:30pm

The Indian Government considers to raise minimum wage despite distrust of textile industry


The new Indian government is studying to raise the country's minimum wage. The country's Prime Minister, Narendra Modi, re-elected in the last Indian elections, is planning to raise it up to 30% or 40% in some states of India. The minimum wage of the country is granted by each state, although it must always be above the quota set by the central government.


The measure will be included in a new labor law proposed by the government after the previous bill in this regard had to be paralyzed due to the proximity of the elections. The Indian Labor Minister, Santosh Gangawar, has confirmed that the new law will also have an article referring to the minimum monthly payment, according to Just-style.


Currently, the minimum wage established for the whole country is 4.90 dollars per day, with a variable plus based on inflation. However, as it is a decentralized regulation, the state of New Delhi, for example, has a minimum wage of 7.90 dollars a day, while other regions, such as Chhattisgarh, maintain the same criteria as the one set by the central government.





For this reason, Indian manufacturers have progressively moved their production to the Indian states farthest from the capital, where the minimum wage is lower.


With the potential increase of the minimum wage by the Government, the companies would no longer have reasons to move to remote productive areas, according to Chandrima Chaterjee, director of the Indian Council for the Promotion of the Exportation of Clothing (Apec, for its acronym in English).


While the central government believes that the measure will increase growth and boost investment, the Indian textile sector says that raising the minimum wage will affect exports and personnel management, since there will not be enough resources available to pay the overtime hours of Indian employees.

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Gavin R. Putland
27 Jun 2019 — 01:01
What's better than raising the minimum wage? Reducing rents! Why? Because:
(1) When you allow for income tax and withdrawal of welfare, a dollar *saved* is worth much more than a dollar *earned* (google "EMTR" and "cliff effect").
(2) Nobody says lower rents would force employers to cut staff!
(3) Nobody says lower rents would feed into higher prices for the poor!
(4) By definition, the benefit of lower rents isn't competed away in higher rents — as a rise in wages would be. Landlords might even try claw back the *gross* increase in wages, not allowing for the EMTR.
(5) Lower rents mean lower barriers to JOB CREATION. Jobs can't exist unless (a) the employers can afford business accommodation [low *commercial* rents], and (b) the employees can afford housing within reach of their jobs, on wages that employers can pay [low *residential* rents].

And how do we reduce rents? Impose rent control? NO!! That makes it less attractive to supply accommodation. But a tax on vacant lots and unoccupied buildings makes it less attractive NOT to supply accommodation! A vacant-property tax of $X/week makes it $X/week more expensive to fail to get a tenant, and thereby REDUCES, by $X/week, the minimum rent that will persuade the owner to accept a tenant. Better still, the economic activity driven by *avoidance* of that tax would broaden the bases of other taxes, allowing their rates to be reduced, so that the rest of us would pay LESS tax!

— Gavin R. Putland,