India is set to set the minimum wage of a mechanical engineer for the first time, a move likely to boost demand for the engineering profession in the country.
The country’s civil service will pay the equivalent of $30,000 a year, and employers will be required to provide the salary to employees who work on the job, a senior government official said on Wednesday.
India is one of the few countries where the minimum-wage level for civil servants is set by the government.
The minimum wage is $4.20 an hour in India and the federal government has said it is aiming to raise that to $10 an hour by 2022.
India is currently home to the world’s second-largest manual workforce.
The Indian Council of Medical Research estimates that at least one in four of the country’s 1.2 billion population works as a mechanical or electrical engineer, which includes about 10 per cent of the workforce in the industrial cities of Bangalore and Hyderabad.
The move by the civil service comes as the country grapples with a major shortage of skilled labour, especially in IT.
The number of job openings for skilled workers fell by 22 per cent in September compared with the previous month, data from the National Council of Applied Economic Research showed.
Last year, India had an unemployment rate of 6.3 per cent, according to the World Bank.
The government said it was committed to tackling the shortage of labour in the sector.
“The minimum wage will help us in ensuring that there is sufficient manpower available in the labour market,” India’s chief economic adviser Nirmala Sitharaman told reporters in New Delhi on Wednesday, referring to the government’s plans to raise the wage.
At least one Indian manufacturer has raised the minimum salary of a software engineer to $30 a month, the highest wage in the world, with the minimum paid to engineers in India, according the Indian IT Association.
In a recent survey, more than 60 per cent said they were satisfied with their salaries, with almost 80 per cent saying they had a job offer.
More than 10 per part of the economy in India is made up of manual and electric workers, with most of the rest classified as skilled, which is why a high level of demand is expected, the government official, who did not want to be named, said.
Employers would have to make the wage available to employees from the first day of employment, the official said.
The government has set the target to increase the wage by 10 per and 10 per per cent annually, and also to increase it by 10 to 20 per cent every two years, with a target of raising the wage to $15 per hour by 2021.
The move to raise salaries comes as a large number of Indian engineers are moving out of the manufacturing sector.
The last year saw the closure of more than 4,000 manufacturing jobs, according a report from India’s Economic Survey 2017-2021.
About one in five Indian jobs is held by manual workers, according government data, and about 60 per-cent of all Indian workers work in the IT and telecom sectors.
A survey in 2015 by the National Association of Manufacturers said that 70 per cent and 73 per cent workers in the two sectors are in manual and electrical jobs respectively.
This is not the first move by Indian authorities to raise minimum wages.
Earlier this year, the country raised the pay of civil servants to the equivalent wage of $40 a month.
The move has sparked protests and strikes in several cities, particularly in Mumbai, Hyderabad and Ahmedabad, in the past.