Minimum wage hike may trigger pricerise, hit jobs: Karnataka industry bodies
Bengaluru: Industry bodies have warned the state govt that its proposed minimum wage increase could trigger widespread price rises affecting everything from clothing to construction, with the financial burden ultimately falling on consumers.
The Karnataka chapter of the Confederation of Real Estate Developers' Associations of India (Credai) has expressed serious concerns about the impact on housing prices. A Credai board member said: "At a national level, costs are already rising — from construction materials to basic living expenses. With the added wage burden, input cost will escalate, and builders alone won't be able to absorb it. This will eventually be passed on to homebuyers."
"While marginalised groups are getting free power and subsidies, the govt must be cautious about policies that create a cascading effect on the sector. If the proposal is implemented, housing prices will go up by at least 40%. We don't view this move positively and will be submitting our objections to the govt," the member added.
"With the cost of labour going up, builders will look at employing fewer people. All industries might slowly shift towards machinery instead of hiring people," he said.
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The Federation of Karnataka Chambers of Commerce and Industry (FKCCI) president MG Balakrishna urged the govt to reconsider the "abrupt wage hike proposal, which lacks consultation with stakeholders and does not reflect ground realities."
"The move raises serious questions about the rationale behind the increase, especially at a time when industries are grappling with rising input costs and reduced margins."
Peenya Industries Association president Shivakumar R warned that garment industries are among the worst hit—many of them are micro-units employing 100-200 workers, mostly women.
"With profit margins already down to 5–7%, they simply cannot absorb the steep hike in minimum wages. One unit in Kengeri with 800 workers has decided to shift operations out of Karnataka. That means 3,200 lives are impacted if you count the families. If this policy isn't reviewed, many more garment units will shut down or move to neighbouring states, leading to massive job losses. This might even drive garment prices up," he said.
Defending the proposal, Ravi Kumar SB, joint labour commissioner (child cell and minimum wages), said the govt took the decision after considering all factors and calculations done as per the Minimum Wages Act.
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"It (minimum wage increase proposal) is still a draft, and we are waiting for the response from people. After that, we will discuss the issue threadbare before coming to a conclusion. It's not a sudden decision, and talks have been going on for quite some time
-Ravi Kumar SB, joint labour commissioner
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