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Article

9 Feb 2021

Author:
Nikhil Eapen, Article 14

Gulf: Indian Govt. cuts minimum wages for nationals, leading to contract substitution & abuse by employers

"How India cut minimum wages for Gulf-bound migrants in the pandemic," 4 Feb 2021

In September 2020... the ministry of external affairs issued two wage circulars (here and here) which effectively reduced the minimum monthly wages for migrants recruited to work in six Gulf countries by at least 20 to 50%.

The Indian government set minimum referral wages to protect wages of nationals in 18 “Emigration Check Required (ECR)” countries... Wage rates are notified by executive order following consultations with Indian missions and form a benchmark for foreign businesses hiring from India...

none of the Gulf countries, except Qatar—that announced a $275 minimum wage last August—have a statutory minimum wage.

India’s referral wage system—fixed by executive order—tried to plug the gap, providing foreign employers benchmark wages by occupation...

Until the new circulars were announced, the wages schedule offered workers a specific monthly salary based on their job and the country of destination—this varied widely...

It was a complicated system that was much abused. Errant employers rigged it—offering model contracts to workers at home, which they later substituted with a worse contract once they arrived in the Gulf. Often, workers were told about the substitution in advance.

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