BENGALURU: The state govt’s minimum wage hike proposal has rattled the hospitality industry. Hoteliers in the city say they may have no choice but to raise food prices by 20-30%, as the proposed plan, if implemented, is expected to increase the wages of a significant portion of their staff by 50%.
Industry bodies are now preparing to raise objections to the draft notification issued on April 11, which proposes a hike in minimum wages. As per the draft, wages will be proportionally increased for four categories of workers — highly skilled, skilled, semi-skilled, and unskilled — across three designated zones.
According to hoteliers, skilled and highly skilled workers, such as cooks, dosa masters, coffee makers, restaurant managers, and kitchen supervisors, are already paid well above the minimum wage, and the proposed hike would have a limited impact on their salaries given their smaller numbers. However, unskilled and semi-skilled workers, like helpers, washer boys, housekeepers, security guards, store personnel, and serving staff, make up a large portion of the workforce. They point out that in Bengaluru, wages for unskilled workers could rise by 48%, while semi-skilled workers could see a 52% increase.
PC Rao, honorary president of Bangalore Hotels’ Association, told TOI, “We’ll be registering our objections soon. Hotels already pay around Rs 40,000 a month for highly skilled roles like cooks, with only a small difference compared to skilled workers such as coffee makers and dosa masters. Therefore, a wage increase has little relevance for them. However, the proposed hike will affect semi-skilled and unskilled workers, who make up 70% of the workforce in the hotel industry.”
‘Small hotels will suffer’
GK Shetty, president of Karnataka State Hotel Association, expressed that the proposed wage hike feels like a punishment for registered establishments. “After several price increases — milk, coffee powder, groceries, rice — the suggested wage hike, which is far beyond a reasonable 10%, will significantly raise the cost of our products. We anticipate a price revision of 20-30%,” he said.
“Smaller hotels, which barely break even each month, will be the ones to suffer. Larger establishments will raise their prices, and customers will continue to frequent them because of their higher spending capacity. However, if the smaller joints, which are popular among office-goers who don’t bring food from home, also increase their prices, the more affordable option for the middle class will become street food vendors. This cycle of price hikes could slowly drive small hotels out of business,” a hotelier said, expressing hope the govt would introduce a support package to help these smaller establishments survive.
He also questioned the rationale of the wage hike proposal for certain segments of workers, as it could push them above the upper limit for availing ESI (employee state insurance) facilities. He said this may call for a revision of the ESI cap, as these workers’ healthcare cover could take a hit.
A labour consultant who works with hotels in the city said: “It affects both sides. From the employee’s perspective, wage revisions are beneficial, as they come after five years and help adjust for the rising cost of living. For hotels, while star establishments can afford the hike, smaller ones, like darshinis, may struggle to pay Rs 23,000 to cleaners (unskilled). There should be a grading system for hotels, such as star hotels, darshinis and so on.”
WHOSE WAGES WILL SEE 50% RISE?
Industry bodies are now preparing to raise objections to the draft notification issued on April 11, which proposes a hike in minimum wages. As per the draft, wages will be proportionally increased for four categories of workers — highly skilled, skilled, semi-skilled, and unskilled — across three designated zones.
According to hoteliers, skilled and highly skilled workers, such as cooks, dosa masters, coffee makers, restaurant managers, and kitchen supervisors, are already paid well above the minimum wage, and the proposed hike would have a limited impact on their salaries given their smaller numbers. However, unskilled and semi-skilled workers, like helpers, washer boys, housekeepers, security guards, store personnel, and serving staff, make up a large portion of the workforce. They point out that in Bengaluru, wages for unskilled workers could rise by 48%, while semi-skilled workers could see a 52% increase.
PC Rao, honorary president of Bangalore Hotels’ Association, told TOI, “We’ll be registering our objections soon. Hotels already pay around Rs 40,000 a month for highly skilled roles like cooks, with only a small difference compared to skilled workers such as coffee makers and dosa masters. Therefore, a wage increase has little relevance for them. However, the proposed hike will affect semi-skilled and unskilled workers, who make up 70% of the workforce in the hotel industry.”
‘Small hotels will suffer’
GK Shetty, president of Karnataka State Hotel Association, expressed that the proposed wage hike feels like a punishment for registered establishments. “After several price increases — milk, coffee powder, groceries, rice — the suggested wage hike, which is far beyond a reasonable 10%, will significantly raise the cost of our products. We anticipate a price revision of 20-30%,” he said.
“Smaller hotels, which barely break even each month, will be the ones to suffer. Larger establishments will raise their prices, and customers will continue to frequent them because of their higher spending capacity. However, if the smaller joints, which are popular among office-goers who don’t bring food from home, also increase their prices, the more affordable option for the middle class will become street food vendors. This cycle of price hikes could slowly drive small hotels out of business,” a hotelier said, expressing hope the govt would introduce a support package to help these smaller establishments survive.
He also questioned the rationale of the wage hike proposal for certain segments of workers, as it could push them above the upper limit for availing ESI (employee state insurance) facilities. He said this may call for a revision of the ESI cap, as these workers’ healthcare cover could take a hit.
A labour consultant who works with hotels in the city said: “It affects both sides. From the employee’s perspective, wage revisions are beneficial, as they come after five years and help adjust for the rising cost of living. For hotels, while star establishments can afford the hike, smaller ones, like darshinis, may struggle to pay Rs 23,000 to cleaners (unskilled). There should be a grading system for hotels, such as star hotels, darshinis and so on.”
WHOSE WAGES WILL SEE 50% RISE?
- Semi-skilled workers: Room boy, assistant coffee/tea maker, server, waiter, butler, grinder, vegetable/meat cutter, parcel boy, lift attendant
- Unskilled workers: Water carrier, gardener, dhobi, watchman, peon, sweeper, office assistant, etc.
— Source: Bangalore Hotels’ Association
