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Unprecedented minimum wage hike in Delhi
May '10
The minimum wages in Delhi are now at the highest level in the country, following the 49 percent raise in minimum wages, increased by the Delhi Government from February this year.

These increase in minimum wage levels have affected the wage bills of industries in the National Capital Territory (NCT) drastically, owing to which a number of industries are looking for the shift to suburban areas such as Faridabad, Noida and Gurgaon.

While the larger industries, which already pay higher wages, feel comparatively less heat of this increase, the smaller enterprises in the micro, small and medium enterprises (MSME) as well as the export-based units, are the most impacted industries, where the margins fluctuate with the currency rates.

Salaries at lower levels, for unskilled labourers have increased to Rs 5,278 from Rs 3,953 a month, while on the higher end, for graduates it has been increased to Rs 7,020 from Rs 4,713. Such a steep increase in minimum wages has taken place for the first time, as usually it is increased by 5 to 6 percent, twice in a year.

This wage increase does not include provident fund deduction and the ESI, hence it hikes wages by an additional 6 to 7 percent, which is very high for the industries such as apparel exports, said an official, who further opined that the potential of the industry regarding salary payment must be examined, as not all the industries can afford similar wage payment.

For instance, if an apparel company employs around 1,000 workers including 600 tailors and if for tailors, the average wage goes up to Rs 6,500 from Rs 5,000, the company's wage bill would increase by about Rs 900,000 to one million per month.

There are around 500 apparel export companies in Delhi, operating in Naraina, Kirti Nagar, Okhla, I P Extension, and other small industries more than these. A lot of big and small industries are considering relaocting their industries to the nearby towns of Gurgaon, Noida and Faridabad to evade higher costs.

Fibre2fashion News Desk - India

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