The industrial sector in Karnataka is facing a potential crisis as industries, particularly small and medium enterprises (SMEs), threaten to shut down operations in protest against the state government’s proposed wage hike.
The draft notification suggests revising the minimum wages for laborers from the current ₹12,000–₹21,000 per month to ₹25,000–₹31,000 per month, depending on the skill level of the workers.
Industry leaders argue that this “unilateral decision” could have devastating consequences for the manufacturing sector, which is already grappling with rising operational costs.
Proposed Wage Hike for Karnataka Industrial Workers
The Karnataka government’s draft notification aims to increase the minimum wages across multiple sectors, aligning them with inflation and the rising cost of living.
The revised wages would range from ₹25,000 for unskilled laborers to ₹40,000 for highly skilled workers.
While the move is intended to improve the standard of living for workers, it has sparked significant backlash from industry associations.
Industry leaders have expressed strong opposition to the proposed wage hike, citing its potential to cripple businesses, particularly SMEs.
The Karnataka Small Scale Industries Association (KASSIA), which represents over seven lakh members, has warned that the revised wages would make it nearly impossible for industries to sustain operations.
According to KASSIA, over 1.5 crore people depend on SMEs for their livelihoods, and any disruption could lead to widespread job losses.
R. Shiva Kumar, President of the Peenya Industries Association (PIA), stated, “We did not protest when the state government revised stamp duty, hiked taxes on petrol and diesel, and raised electricity and water tariffs.”
He added, “But this wage revision will cripple us. We have already held meetings with industrialists across Karnataka and have collectively decided to shut down operations indefinitely or scale down activities considerably.”
Financial Implications for Industries in Karnataka
The proposed wage hike would significantly increase the financial burden on industries.
Currently, industries pay wages ranging from ₹15,000 to ₹25,000 per month, including perks and facilities.
Under the revised structure, this outlay would rise to ₹25,000–₹40,000 per month.
Industry leaders argue that such an increase is unsustainable, especially given the rising costs of raw materials, electricity, and other inputs.
Arun Kumar, an industrialist from Peenya, highlighted the challenges, saying, “We provide free accommodation and two-wheelers to our staff besides wages.”
He added, “If the new rules are implemented, we would have to either cut jobs or scale down operations.”
Potential Impact on Investments and Employment
The manufacturing and SME sectors in Karnataka accounted for ₹10,000 crore in investments in 2024, with Bengaluru receiving a significant share.
Industry associations warn that the proposed wage hike could deter future investments, with some estimating a 50% drop in investment inflows.
Entrepreneurs may also resort to job cuts and increased automation to offset the higher wage burden, further exacerbating unemployment.
The Karnataka government has defended the proposed wage hike as a necessary step to ensure fair compensation for workers.
However, industry leaders have called for a more collaborative approach, urging the government to consider the financial constraints faced by businesses.
Discussions between industry associations and the Federation of Karnataka Chambers of Commerce and Industry (FKCCI) are ongoing, with the hope of reaching a mutually acceptable solution.
Note: We are also on WhatsApp, LinkedIn, Google News, and YouTube. To get the latest news updates, subscribe to our channels. WhatsApp: Click Here, Google News: Click Here, YouTube: Click Here, and LinkedIn: Click Here.
