Industries may shift out of Delhi if government hikes minimum wages: FICCI

Thursday, Aug 11, 2016,11:48 IST By metrovaartha A A A

New Delhi | In view of the Delhi government’s plan to increase minimum wages by 30-40 per cent, FICCI has written to Labour Minister Gopal Rai, saying that this may lead to shifting out of several industries from the national capital to neighboring states.

The industry body has also indicated that the proposed hike in minimum wages will severely hurt the growth of micro and small enterprises in the national capital and hence the AAP government should reconsider this proposal.

As this sector accounts for creating maximum employment and operates on marginal viability, a substantial increase in wages is not sustainable and may see closure of many small and tiny enterprises and loss of employment will be the direct outcome.

Further increase in wage may only force industry to migrate to the neighbouring states offering cost advantages.

As you are aware, industry has to pay social security and other benefits, approximate 25 per cent over and above the wages.

These contributions will also automatically increase, pushing the overall labour cost, A Didar Singh, Secretary General of FICCI, said in his letter to the Labour Minister.

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