Wage Increase: Fostering a Balanced Economy

Shrinivas Dempo, President of GCCI, shares the organisation’s perspective on the recent developments surrounding the revision of minimum wage rates

I am writing to express my concerns regarding the recent revision of minimum wage rates by approximately 33% in Goa. The entire increase is loaded on to ‘Basic Wages’ and as such, employers have to bear the additional burden of about 25% on the increased cost towards Provident Fund (PF), Bonus, and Employees’ State Insurance (ESI) etc. While I appreciate the intent behind such revisions, I am apprehensive about the potential repercussions, particularly on micro, small industries, contractors, and shops. The increased minimum wage rates, though aimed at addressing the welfare of workers, may inadvertently pose challenges to the business viability of smaller entities. Micro and small industries, often operating on tight profit margins, could find it challenging to absorb the increased labour costs. This, in turn, might affect their sustainability and ability to compete in the market. Contractors, who play a crucial role in various projects, might face increased financial burdens, impacting their ability to bid competitively for contracts. This could potentially result in a slowdown of economic activities and job opportunities in the region. Shops and establishments, especially those in the retail sector, may experience a strain on their operational costs. For many small businesses, such adjustments in labour expenses could impact pricing, customer relations, and overall business stability. While recognising the importance of fair wages, I urge the authorities to consider the diverse economic landscape, where the impact of such revisions can be disproportionately felt by smaller businesses. A more balanced approach that takes into account the unique challenges faced by micro and small enterprises would be highly beneficial.

President of GCCI, Chairman of Dempo Group of Companies

While we understand the importance of fair compensation for labour, it is crucial to strike a balance that ensures the sustainability of businesses, especially in the current economic landscape. The recent revision to Rs. 512/- per day for unskilled workmen by the government is a step towards addressing the concerns of the workforce, but the demand for Rs. 750/- per day poses significant challenges for businesses. As representatives of the business community, we acknowledge the need for fair wages that reflect the cost of living. However, we also emphasise the importance of a collaborative approach between labour and management. If workers’ unions advocate for a higher minimum wage, it would be beneficial for all stakeholders to explore corresponding increases in productivity. Productivity enhancement initiatives can include skill development programs, training, and improved work processes. A commitment from the labour force to contribute positively to productivity growth would provide a stronger foundation for justifying a higher minimum wage. This collaborative effort ensures that the burden of increased labour costs is accompanied by improved efficiency and competitiveness.

It is essential to note that absorbing a steep increase in wages without a parallel commitment to productivity enhancement may have adverse effects on the viability of businesses, particularly smaller enterprises. This could potentially lead to job cuts, operational challenges, and a negative impact on the overall business environment. We advocate for open dialogue and collaboration between labour representatives, businesses, and government authorities to find a balanced solution that addresses the legitimate needs of the workforce while safeguarding sustainability of businesses.

We remain committed to fostering a constructive dialogue for the betterment of our community.
On behalf of Goa Chamber of Commerce and Industry, we appreciate the government’s commitment to revising wages to ensure fair compensation for workers. Our business community by and large has implemented and complied with the new revised minimum wage rates. We would like to express our concerns about the potential impact on small and medium-sized enterprises (SMEs). We believe that a phased implementation, accompanied by support measures, would help mitigate any adverse effects on these vital contributors to our economy. Additionally, we request an open dialogue to collaboratively address the specific challenges our members may face during this transition. We are committed to working together for the betterment of both businesses and the workforce. Some of the micro and small industrial establishments, hotels and restaurants and shops have reported us difficulties in implementing these new revised minimum wages threatening their very existence resulting in closing down their businesses.

I appreciate the opportunity to share my perspective on the collaborative efforts needed between the government and industries to foster a balanced and inclusive economy. In my opinion, it is imperative for the government to play a proactive role in setting a conducive work culture, establishing productivity standards, discouraging union multiplicity and militancy, and reforming labour legislations. Additionally, initiatives should be taken to streamline processes for the ease of doing

Such collaboration is crucial for sustained economic growth.

Here are some key areas where concerted efforts can make a significant impact:

1. Work Culture: The government should actively promote a positive work culture that encourages innovation, diversity, and inclusivity. This includes initiatives to support employee well-being and professional development.

2. Productivity Standards: Establishing clear and realistic productivity standards, in consultation with industries can enhance efficiency and competitiveness. Regular reviews and adjustments based on industry feedback are essential for effectiveness.

3. Discouraging Union Multiplicity and Militancy: While respecting the rights of workers to organise, efforts should be made to discourage excessive union multiplicity and militancy. Promoting constructive dialogue between employers and employees can contribute to a harmonious working environment.

4. Reforming Labour Legislations: Regularly reviewing and updating labour legislations to align with evolving economic landscapes is crucial. Striking a balance between protecting workers’ rights and creating a flexible business environment is key for sustainable growth.
Goa is the only state prescribing compensation at the rate of 45 days wages in case of retrenchment and closure while it is 15 days wages in all other states. This has discouraging effect on the new investments in Goa. Lots of delays in issuing and renewing factory licenses, abnormal fees charged for conducting various tests and audits ( through third party consultants).

5. Ease of Doing Business: The government should take concrete steps to simplify bureaucratic processes, reduce red tape, and create a business-friendly environment.

This includes leveraging technology for smoother interactions between businesses and regulatory bodies. I believe that by focusing on these aspects, the government and industries can collaboratively create an environment conducive to balanced and inclusive economic growth.

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