REPORT ON THE WORKING OF THE MINIMUM WAGES ACT, 1948 FOR
THE YEAR 2006
REPORT ON THE WORKING OF THE MINIMUM WAGES ACT, 1948 FOR THE YEAR 2006
1.1 The purpose of seeking employment is to sell labour to earn wages so as to attain a ‘decent’ or ‘dignified’ standard of living. The wage or income that a worker obtains from his /her work is therefore, what enables him /her to achieve a fair standard of living. One seeks a fair wage both to fulfil one’s basic needs and to feel reassured that one receives a fair portion of the wealth that one works to generate for society. Society has a duty to ensure a fair wage to every worker, to ward off starvation and poverty, to promote the growth of human resources, and to ensure social justice without which likely threats to law and order may undermine economic progress.
1.2 The Constitution of India accepts the responsibility of the State to create an economic order in which every citizen finds employment and receives a ‘fair wage’. This made it necessary to quantify or lay down clear criteria to identify a fair wage. Therefore, a Central Advisory Council in its first session (November, 1948) appointed a Tripartite Committee on Fair Wages. The Committee consisted of representatives of employers, employees and the Government. Their task was to enquire into and report on the subject of fair wages to labour.
1.3 The Committee on Fair Wages defined three different levels of wages viz;
(i) Living wage
(ii) Fair wage
1.3.1 LIVING WAGE:
The living wage, according to the Committee, represented the highest level of the wage which should enable the worker to provide for himself and his family not merely the basic essentials of food, clothing and shelter but a measure of frugal comfort including
education for children, protection against ill health, requirements of essential social needs and a measure of insurance against more important misfortunes including old age. But the Committee felt that when such a wage is to be determined, the considerations of national income and the capacity to pay of the industry concerned has to be taken into account and the Committee was of the opinion that living wage had to be the ultimate goal or the target.
1.4 FAIR WAGE:
1.4.1 The Fair Wages Committee in this connection observed : “ the objective is not merely to determine wages which are fair in the abstract, but to see that employment at existing levels is not only maintained, but if possible increased. From this point of view, it will be clear that the levels of the wages should enable the industry to maintain production with efficiency. The capacity of industry to pay should, therefore, be assessed by the Wage Boards in the light of this very important consideration.”
1.4.2 The Fair Wages Committee also recommended that the fair wage should be related with the productivity of labour. In this connection it may be said that in India since the existing level of wages is unable to maintain the workers on subsistence plus standard, it is essential that the workers must be first assured a living wage and only after this minimum has been done, the wages should be related to the productivity. The Committee further recommended that the fair wage should be related with the prevailing rates of the wages, though in view of unduly low wages prevailing even in organized industries in the country, it laid that the wage fixing machinery should, therefore, make due allowance for any depression of wages caused by unequal bargaining.
1.4.3 With regard to the machinery to be adopted for the fixation of fair wages, the Committee favoured the setting up of Wage Boards. It recommended that there should be a State Board for each State, composed of independent members and representatives of employers and employees in equal numbers. In addition to the State Board, there should be a Regional Board for each of the industry taken up for wage regulation. Finally, there should be Central Appellate Board to which appeals may be preferred from the decision of the Wage Boards. On the recommendations of the Committee on Fair Wages, a bill was introduced in the Parliament in August 1950, known as Fair Wages Bill. It aimed at fixing fair wages for workers employed in first instance, in factories and mines. It contained various other useful provisions also. But the bill now stands lapsed.
1.4.4 The Fair Wage Committee appointed by the Government of India, as stated earlier, drew a distinction between a minimum and a living wage and observed that the minimum wage is less than the living wage. With regard to the fair wage, the Committee recommended that it should be above the minimum wage and below the living wage.
1.5 MINIMUM WAGE:
1.5.1 The Committee was of the view that a minimum wage must provide not ‘merely for the bare sustenance of life, but for the preservation of the efficiency of the worker’. For this purpose the minimum wage must also provide for some measure of education, medical requirements and amenities.
1.5.2 The statutory Minimum Wage is the wage determined according to the procedure prescribed by the relevant provisions of the Minimum Wages Act, 1948.
1.5.3 The question of establishing statutory wage fixing machinery in India was, therefore, discussed at the third and fourth meetings of the Standing Labour Committee held in 1943 and 1944 respectively and at successive sessions of the Tripartite Labour Conference in 1943, 1944 and 1945. The last of these approved in principle the enactment of minimum wages legislation. On April 11, 1946, a Minimum Wages Bill was introduced in Parliament but the passage of the Bill was considerably delayed by the constitutional changes in India. It was, however, passed into an Act in March 1948.
1.5.4 The Act applies to the employments that are included in Parts I and II of the Schedule Appended to the Act. The authority to include an employment in the schedule and to take steps for getting the minimum rates of wages fixed or revised vests with the Government – Central or State, according to the nature of employment. Once the minimum rates of wages are fixed according to the procedure prescribed by law, it is the obligation of the employer to pay the said wages irrespective of the capacity to pay.
1.6 CONCEPT OF THE MINIMUM WAGES AS DEFINED IN THE VARIOUS INTERNATIONAL LABOUR ORGANISATION (ILO) CONFERENCES
1.6.1 A brief history of the concept of Minimum Wages as taken up under the various International Labour Organisation Conferences from time to time is traced in the following paragraphs.
1.6.2 CONVENTION NO.26
ELEVENTH SESSION (1928)
1.6.3 Eleventh Session held on 30 May 1928, was convened at Geneva. Adoption of proposals with regard to Minimum Wage Fixing Machinery was the first item on the agenda of the Session.
1.6.4 CONVENTION NO. 99
THIRTY FOURTH SESSION (1951)
1.6.5 The Thirty Fourth Session was held on 6th June, 1951 and the Convention concerning the Minimum Wage Fixing Machinery in Agriculture was the eighth item on the agenda of the Session. The guidelines for creation / maintenance of adequate machinery whereby Minimum wages can be fixed for agricultural workers were similar to those stated for Minimum Wage Fixing Machinery in the 11th Session of the ILO.
1.6.6 CONVENTION NO.131
FIFTY FOURTH SESSION 1970
1.6.7 The General Conference of the ILO, met in its 54th Session on 3rd June, 1970 in Geneva, passed the Convention concerning Minimum Wage Fixing, with special reference to developing countries on 22nd June,1970. It was thought that the earlier conventions with regard to the Minimum Wages had played a valuable part in protecting disadvantaged groups of wage earners and that another convention was needed to complement the earlier ones, which, while of general application, will pay special regard to the needs of developing countries.
1.7 MINIMUM WAGE DEFINED IN THE VARIOUS SESSIONS OF INDIAN LABOUR CONFERENCES
1.7.1 FIFTEENTH SESSION, (1957)
1.7.2 At the 15th Session of the Indian Labour Conference held at New Delhi in July 1957, an important resolution was passed, which laid down that the minimum wage should be need-based and should ensure the minimum human needs of the industrial worker. The following norms were accepted as a guide for all wage- fixing authorities including Minimum Wage Committees, Wage Boards, Adjudicators, etc.:
(i) In calculating the minimum wage, the standard working class family should be taken to comprise three consumption units for one earner, the earnings of women, children and adolescents being disregarded.
(ii) Minimum food requirements should be calculated on the basis of a net intake of 2700 calories as recommended by Dr. Akroyd for an average Indian adult of moderate activity.
(iii) Clothing requirements should be estimated on the basis of a per capita consumption of 18 yards per annum, which would give for the average worker’s family of four a total of 72 yards.
(iv) In respect of housing, the norm should be the minimum rent charged by Government in any area for houses provided under the Subsidised Industrial Housing Scheme for low – income groups ; and
(v) Fuel, lighting and other miscellaneous items of expenditure should constitute 20 per cent of the total minimum wage. The Resolution further laid down that wherever the minimum wage fixed was below the norms recommended above, it would be incumbent on the authorities concerned to justify the circumstances which prevented them from adherence to the aforesaid norms. The Resolution, thus, tried to give a concreteness to the whole concept of minimum wage.
In 1991, the Supreme Court in its judgment expressed the view that children’s education, medical requirement, minimum recreation, including festivals ceremonies, provision for old age and marriage should further constitute 25 per cent and be used as a guide for fixing the minimum wage.
1.7.3 THE THIRTIETH SESSION (1992)
The Indian Labour Conference in its Thirtieth Session in September, 1992 expressed the view that while the tendency to fix minimum wages at unrealistically high levels must be checked, implementation of wages once fixed must be ensured. It felt that the implementation machinery, consisting of labour administration in the States had been far from effective. It was desirable that workers’ organizations and non-governmental voluntary organizations etc., played a greater role instead of engaging an army of inspectors for this purpose.
The Minimum Wage rates should be revised at an appropriate interval not exceeding five years.
1.7.5 PROCEDURE FOR FIXATION/REVISION
In (Section 5 of) the Minimum Wages Act, 1948, two methods have been provided for fixation/revision of minimum wages. They are the Committee method and Notification method.
(i) COMMITTEE METHOD
Under this method, committees and sub-committees are set up by the appropriate Governments to hold enquiries and make recommendations with regard to fixation and revision of minimum wages, as the case may be.
(ii) NOTIFICATION METHOD
In this method, Government proposals are published in the Official Gazette for information of the persons likely to be affected thereby and specify a date not less than two months from the date of the notification on which the proposals will be taken into consideration. After considering advice of the Committees/Sub-committees and all the representations received by the specified date in Notification method, the appropriate Government shall, by notification in the Official Gazette, fix/revise the minimum wages in respect of the concerned scheduled employment and it shall come into force on expiry of three months from the date of its issue.
1.7.6 VARIABLE DEARNESS ALLOWANCE (VDA)
It was recommended in the Labour Ministers' Conference held in 1988, to evolve a mechanism to protect wages against inflation by linking it to rise in the Consumer Price Index. The Variable Dearness Allowance came into being in the year 1991. The allowance is revised twice a year, once on 1st April and then on 1st October.
1.7.7 ENFORCEMENT MACHINERY
The enforcement of the provisions of the Minimum Wages Act in the Central Sphere is secured through the officers of Central Industrial Relations Machinery. In so far as State Sphere is concerned, the enforcement is the responsibility of the respective State Government/Union Territory.
1.7.8 NATIONAL WAGE POLICY
Though it is desirable to have a National Wage Policy it is difficult to conceive a concept of the same. The issue of National Wage Policy has been discussed on many occasions at various forums. Because fixation of wages depends on a number of criteria like local conditions, cost of living and paying capacity also varies from State to State and from industry to industry, it would be difficult to maintain uniformity in wages. The Indian Labour Conference, held in November, 1985 expressed the following views-
“Till such time a national wage policy does not come into being, it would be desirable to have regional minimum wages in regard to which the Central Government may lay down the guidelines. The Minimum Wages should be revised at regular periodicity and should be linked with rise in the cost of living”
Accordingly, the Government issued guidelines in July, 1987 for setting up of Regional Minimum Wages Advisory Committees. These Committees renamed subsequently as Regional Labour Ministers’ Conference, made a number of recommendations which include reduction in disparities in minimum wages in different states of a region, setting up of inter-state Coordination Council, consultation with neighbouring States while fixing/revising minimum wages etc.
1.7.9 REGIONAL COMMITTEES TO REDUCE DISPARITIES IN WAGES
There is disparity in rates of minimum wages in various regions of the country. This is due to the differences in socio-economic and agro-climatic conditions, prices of essential commodities, paying capacity, productivity and local conditions influencing the wage rate. The regional disparity in minimum wages is also attributed to the fact that both the Central and State Governments are the appropriate Government to fix, revise and enforce minimum wages in scheduled employments in their respective jurisdictions under the Act . To bring uniformity in the minimum wages of scheduled employments, the Union Government has requested the States to form regional Committees. At present there are five Regional Minimum Wages Advisory Committees in the country which are as under:-
NAME OF THE REGION
West Bengal, Orissa, Bihar, Jharkhand and Andaman & Nicobar Islands.
North Eastern Region
Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Sikkim, Nagaland and Tripura.
Andhra Pradesh, Karnataka, Kerala, Tamil Nadu, Pondicherry and Lakshadweep.
Punjab, Rajasthan, Himachal Pradesh, Jammu & Kashmir, Haryana, Uttar Pradesh, Uttarakhand, Delhi and Chandigarh.
Maharashtra, Gujarat, Goa, Madhya Pradesh, Chhattisgarh, Dadra & Nagar Haveli and Daman & Diu.
1.8 CONCEPT OF NATIONAL FLOOR LEVEL MINIMUM WAGE
1.8.1 In order to have a uniform wage structure and to reduce the disparity in minimum wages across the country, the concept of National Floor Level Minimum Wage was mooted on the basis of the recommendations of the National Commission on Rural Labour (NCRL) in 1991. Keeping in view the recommendation of NCRL and subsequent rise in price indices, the National Floor Level Minimum Wage was fixed at Rs. 35/- per day in 1996. The Central Government raised the National Floor Level Minimum Wage to Rs. 40/- per day in 1998 and further to Rs. 45/- with effect from 01.12.1999, and Rs. 50/- per day with effect from 1.9.2002. Based on the norms suggested by the Working Group and its acceptance by the Central Advisory Board subsequently in its meeting held on 19.12.2003, national floor level minimum wage was revised upward to Rs. 66/- per day with effect from 1.02.2004. The Central Government has increased the National Floor Level Minimum Wage from Rs. 66/- to Rs. 80/- per day with effect from September, 2007. The National Floor Level Minimum Wage, however, has no statutory
backing. The State Governments are persuaded to fix minimum wages such that in none of the scheduled employments,  the minimum wage is less than National Floor Level Minimum Wage.