WAGE POLICY IN INDIA

Introduction :A national wage policy, thus aims at

establishing wages at the highest possible level, which
the economic conditions of the country permit and
ensuring that the wage earner gets a fair share of the
increased prosperity of the country as a whole resulting
from the economic development.

Defination :According to Parliament of India the Wages

Policy Act in 1948, giving both the Central government
and State government jurisdiction in fixing wages. The
act is legally non-binding, but statutory. Payment
of wages below the minimum wage rate amounts to
forced labour.

Objectives :1. To eliminate malpractices in the payment of wages.

2. To set minimum wages for workers, whose bargaining
position is weak due to the fact that they are either unorganised or inefficiently organised. In other words, to reduce
wage differential between the organised and unorganised
sectors.

3. To rationalise inter-occupational, inter-industrial and interregional wage differentials in such a way that disparities are
reduced in a phased manner.
4. To ensure reduction of disparities of wages and salaries
between the private sector and public sector in a phased
manner.
5. To compensate workers for the raise in the cost of living in
such a manner that in the process, the ratio of disparity
between the highest paid and the lowest paid worker is
reduced.
6. To provide for the promotion and growth of trade unions and
collective bargaining.
7. To obtain for the workers a just share in the fruits of
economic development.
8. To avoid following a policy of high wages to such an extent
that it results in substitution of capital for labour thereby
reducing employment.
9. To prevent high profitability units with better capacity to pay a
level of wages far in excess of the prevailing level of wages in
other sectors.
10.To permit bilateral collective bargaining within national
framework so that high wage islands are not created.

Importance :

Minimum Wage: Minimum wage is what wage which must invariably be

paid whether the company big or small, makes profits or not. It is the
bare minimum that a worker can expect to get for services rendered by
him. The 15 Indian Labour Conference(1957) formally quantified the
term minimum wages thus:
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 adolescent being
disregarded;
Minimum food requirements should be calculated on the basis of a
set intake of calories as recommended by Dr. Aykroyd for an average
Indian adult of moderate activity;
Clothing requirements should be estimated on the basis of per
capita consumption of 18 yards per annum which would give for the
average workers family of four a total of 72 yards;
In respect of housing, the rent corresponding to the minimum area
provided for under government industrial housing scheme should be
taken into consideration fixing the minimum wages;
Fuel, lighting and other miscellaneous items of expenditure should
constitute 20% of the total minimum wage.
Fair Wage: It is that wage which is above the minimum wage but below
the living wage. According to the Committee on Fair Wages, 1948, fair
wages should be determined taking the following factors in to account:
The productivity of labour;
The prevailing rates of wages in the same or similar occupation in
the same region or neighbouring regions;
The level of national income and its distribution;
The place of industry in the economy of the country; and
The employers capacity to pay.

Living Wage: According to the Committee on Fair Wages, the living

wage is the highest among the three. It must provide
1.
Basic needs of life
2.
Efficiency of worker and

3.

satisfying social needs of workers such as medical, education,

retirement, etc. Living Wage is a dynamic concept, which grows in line
with the growth of the national economy.

Conclusion :Wage policy t means the formulation and adoption of a set of

principles in order to guide the wage movements for the
realisation of certain desirable social and economic ends.
Hence, wage policy ought to be considered as one of the
strategic policies of any nation.
An effective wage policy should evolve a wage structure
conducive to socioeconomic development. The primary goal
should be to minimise the conflicts between labour and capital.
It should stimulate a peaceful and cordial industrial atmosphere
essential to greater productivity. In order to achieve such
objectives an effective wage determining machinery is i nevi
table .