Section 7 of COW : Section 7: Components Of Minimum Wages

Explanation using Example

Imagine that the government of a state in India has decided to revise the minimum wage for construction workers due to an increase in the cost of living. According to Section 7 of The Code on Wages, 2019, the government has three options:

1. They can set a basic wage and add a separate cost of living allowance that will be adjusted periodically to match the changes in the local cost of living index.
2. Alternatively, they could establish a basic wage that may include the cost of living allowance and add the cash value of discounts on essential items like rice or pulses, if there are schemes providing such concessions to workers.
3. Lastly, they could decide on an all-inclusive wage that covers the basic wage, the cost of living allowance, and the cash value of any concessions.

In this scenario, the state government opts for the first option and announces a new basic wage for construction workers, along with a cost of living allowance that will be adjusted every six months to reflect the current cost of living index. This ensures that the workers' wages remain fair and in line with the economic conditions of the area.