CONCEPT OF WAGES AND WAGE POLICY

S.S. Jain Subodh Law College

CONCEPT OF WAGES AND WAGE POLICY

Project SubMrion as the Partial Fulfillment of Periodic Evaluation

Of LABOUR LAW-II

SubMrion To: Submitted By:

Mr. MANOJ JAIN Tushar Saxena

FACULTY OF LAW Roll no: - 53

V Semester

S.S. Jain Subodh Law College

DECLARATION
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 CONCEPT OF WAGES AND WAGE POLICY

I, TUSHAR SAXENA, do hereby declare that, this dissertation titled CONCEPT OF WAGES AND
WAGE POLICY is an outcome of the research conducted by me under the guidance of Mr MANOJ
JAIN (Asst. Prof. of Law) at S.S. Jain Subodh Law College in fulfilment for the award of the degree of
B.A.LL.B. at the University of Rajasthan. I also declare that, this work is original, except where
assistance from other sources has been taken and necessary acknowledgements for the same have been
made at appropriate places. I further declare that, this work has not been submitted either in whole or in
part, for any degree or equivalent in any other institution.

Date: 21/02/2017
Place:JAIPUR

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 CONCEPT OF WAGES AND WAGE POLICY
CERTIFICATE

This is to certify that, the dissertation titled CONCEPT OF WAGES AND WAGE POLICY submitted
by TUSHAR SAXENA in fulfillment for the award of the degree of B.A.LL.B. at S.S. Jain Subodh Law
College is the product of research carried out under my guidance and supervision.

Mr .MANOJ JAIN
Asst. Prof. of Law
S.S. Jain Subodh Law College

ACKNOWLEDGEMENT

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I acknowledge with profundity, my obligation to Almighty God and my parents for giving me the grace
to accomplish my work, without which this project would not have been possible.
I express my heartfelt gratitude to my respected faculty, MR MANOJ JAIN (Asst. Prof. of Law) for
providing me with valuable suggestions to complete this dissertation.
I am especially grateful to all my faculty members at SS Jain Subodh Law College who have helped me
imbibe the basic research and writing skills.
Lastly, I take upon myself, the drawbacks and limitations of this study, if any.

Date:21/2/ 17
Place: Jaipur
TUSHAR SAXENA

REVIEW OF LITERATURE

Wage Policy and Industrial Relations in India: A Reappraisal

BY : L. J. Handy and T. S. Papola
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 CONCEPT OF WAGES AND WAGE POLICY
The Economic Journal

He credited the Indian government policy of a well tried and feasible .

He feel that the wage structure has moved in different shape.

WAGE POLICY IN INDIA BY S.K. Puri

March 6, 2016

A wage bill is an important part of the production cost. For any reason whatever, if the wage bill
increases beyond the paying capacity of an employer, the very survival of the firm becomes difficult.
From the employees point of view wages determines his standard of living. Wage policy, therefore, it
is an important issue and recognising it importance the Constitution of India guaranteed equal pay for
equal work for both men and women (Article 39) and reiterated that the state must endeavour to secure
for all workers a living wage and conditions of work which ensure a decent standard of life(Article 43).
After Independence the Government realised that the wages of workers cant be felt to the fluctuations
in labour market conditions. It has decided to fix statutory minimum wages.

Do we need a minimum wage law? {THE HINDU}

MWA is one of the first laws of independent India, legislated in 1948, even before we had a
Constitution in place. Why was it enacted?

The real motive was to buy peace on behalf of a national bourgeoisie that had to manage a
working class that was far more militant in those days. But there were other reasons as well.
India was a poor country with a major surplus of labour. There were too many jobs where
labour did not have the bargaining power to demand a wage sufficient to survive on. Conditions
where employers get away with paying workers too little generate several social costs, such as
poverty, malnutrition, endemic debt leading to bonded labour, and child labour, which could be
avoided through fair wages.

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RESEARCH METHODOLOGY

Research Design

This Research Project titled CONCEPT OF WAGES AND WAGE POLICY has been written using
the doctrinal method of research, which involves the collection of data from different sources, like
articles found in journals and websites.

. Doctrinal research asks what the law is on a particular issue. It is concerned with analysis of the
legal doctrine and how it has been developed and applied. This type of research is also known as pure.

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OBJECTIVES:
To analyse the IMPORTANCEOF WAGE POLICY.
To study the effect WAGE POLICY on INDUSTRIES
.
Hypothesis:
The wage policy by government is a kind of labour welfare.
Research problem:
What is the procedure followed in fixation of wage policy of the company ?
who plays significant role in this process?
Locale of study:
This project work has been done from Library, books, Articles, Home and various other sources

SOURCES OF DATA COLLECTION:

1. BOOKS
2. WEBSITES
3. ARTICLES
A primary source provides direct or firsthand evidence about an event, object, person, or work of
art. Primary sources include historical and legal documents, eyewitness accounts, results of
experiments, statistical data, pieces of creative writing, audio and video recordings, speeches, and art
objects. Secondary sources describe, discuss, interpret, comment upon, analyze, evaluate, summarize,
and process primary sources. Secondary source materials can be articles in newspapers or popular
magazines, book or movie reviews.

TABLE OF CONTENTS

Declaration ..II
Certificate ..III
Acknowledgement..IV
Review of Literature ..V
Research Methodology ....VI
Objective VI
Statement of Problem..VI
Hypothesis ..VI
Locale of Study .VI
Statement of ProblemVI
Sources of Data Collection VII
Introduction VI
Methods of wage determination .VIII
Objectives of wage policyxiv
Types of wages.XV
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CONCLUSION..XVI
Bibliography..XVIII

INTRODUCTION

In economics, the price paid to labour for its contribution to the process of production is called wages.

Labour is an important factor of production. If there is no labour to work, all other factors, be it land or
capital, will remain idle.

Thus, Karl Marx termed labour as the creator of all value.

However, labour alone cannot produce as most of the production is the result of joint efforts of different
factors of production. Therefore, the share of the produce paid to labour for its production activity is
called wage.

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Definitions:

A wage may be defined as the sum of money paid under contract by an employer to worker for services
rendered. -Benham

Wages is the payment to labour for its assistance to production. -A.H. Hansen

Wage rate is the price paid for the use of labour. -Mc Connell

A wage is price, it is the price paid by the employer to the worker on account of labour performed.
-J.R. Turner

METHODS OF WAGE DETERMINATIOPN ININDIA

Methods of Wage Determination in India

1. Fixation of wages is a recent phenomenon in India

2. There was no effective machinery until 2nd world war for settlement of disputes for fixation of
wages.
3. After independence of India, industrial relations become a major issue and there was phenomena
increase in industrial dispute mostly over wages leading to substantial loss of production.
4. Realizing that industrial peace is essential for progress on industrial as well as economic front,
the central govt. convened in 1947, and a tripartite conference consisting of representatives of
employers, labour and government.
Govt. of India formulated industrial policy resolution in 1948 where the govt. has mentioned to
items which has bearing on wages

statutory fixation of minimum wages

Promotion of fair wages.

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5. To achieve 1st objective, the minimum wages act, 1948 was passed to lay down certain norms
and procedures for determination and fixation of wages by central and state govt.
6. To achieve 2nd objective govt. of India appointed in 1949, a tripartite committee on fair wages to
determine the principles on which fair wages should be fixed

Wages and salary incomes in India are fixed through several institutions. These are

Collective bargaining
Industrial wage bound
Govt. appointed pay commissions
Adjudication by courts & tribunals

1. COLLECTIVE BARGAINING:-
Collective bargaining relates to those arrangements under which wages and conditions of
employments are generally decided by agreements negotiated between the parties.
Broadly speaking the following factors affect the wage determination by collective
bargaining process
Alternate choices & demands
Institutional necessities
The right and capacity to strike

In a modern democratic society wages are determined by collective bargaining in

contrast to individual bargaining by working.
In the matter of wage bargaining, unions are primarily concerned with
General level of wage rates
Structure of wages rates (differential among occupations)
Bonus, incentives and fringe benefits, Administration of wages.

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2. INDUSTRIAL WAGE BOARDS:-
Concept of wage board was first enunciated by committee on fair wages.
It was commended by first five year plan and second five year plan also considered wage
board as an acceptable machinery for setting wage disputes.
Wage boards in India are of two types
Statutory wage board
Tripartite wage board
Statutory wage board means a body set up by law or with legal authority to establish
minimum wages and other standards of employment which are then legally enforceable
in particular trade or industry to which boards decision relate.

Tripartite wage board means a voluntary negotiating body set up by discussions between
organized employers, workers and govt. to regulate wages, working hours and related
conditions of employment.

Wage board decisions are not final and are subjected to either executive or judicious
review or reconsideration by other authority or tribunals.
The powers and procedure of wage boards are same as those industrial tribunals
unsaturated under ID Act 1947.

3. PAY COMMISSIONS:-

First pay commission was appointed by govt. of India in 1946 under chairmanship of
justice vardachariar to enquire in to conditions of service of central govt. employees.
The vardachariar commission in its report said that in no case should a mans pay less
than living wage
The 2nd pay commission was appointed in aug. 1957. and commission submits its report
in 1959, examined the norms for fixing a need based minimum wage set up 15 th session
of ILC.
Govt. of India appointed third pay commissions in 1970s which submit its report in
April 1973. In this report commission express its support for a system in which pay

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adjustments will occurs automatically upon an upward movement in consumer price
index.
After thirteen years, govt, appointed fourth central pay cimmissions under chairmanship
of justice P.N.Singhal on July 26, 1983 to examine structure of all central govt.
employees, including those of union territories. Officers belong to all India service and
armed forces. Commission submits its report on July 30, 1986 and recommended drastic
changes in pay scale.
The 5th pay commission (1952-1996) made certain recommendation regarding restricting
of pay scales.
The 6th pay commissions was established on 2006 and committee submit its report on
March 2008.

3. Adjudication
Since independence adjudication has been one of the main instruments for settlement of disputes,
improvement in wage scales and standardization of wages and allowances. Though courts and tribunals
were primarily intended to deal with settlement of industrial disputes, in practiae, wage fixation has
become an important element in their work and functioning. This is because of large of disputes
concerning of wages and allowances. Numerous wage disputes in many industries have been referred
for adjudication to labour courts and tribunals during past ten decades. The high courts and Supreme
Court have also adjudicated upon such disputes. The awards given by these authorities not only helped
in formulation of a body of principles governing wage fixation but laid foundation for present wage
structure in many of major industries. Some major legislation which governs the principles of wage
fixation -Minimum wages Act 1948, Payments of wages Act 1936, Equal Remuneration Act 1976,
Industrial Disputes Act 1947, and Companies Act 2013.

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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 un-organised or inefficiently organised. In other words, to reduce wage differential between the
organised and unorganised sectors.

3. To rationalise inter-occupational, inter-industrial and inter-regional 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.

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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.

TYPES OF WAGES:

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
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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 means the formulation and adoption of a set of principles in order to guide the wage
movements for the realization 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 .

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BIBLIOGRAPHY

Books Referred

1. Misra S.N. Labour and Industrial Laws

2. Srivastava K.D. Commentary on Factories Act. 1948 3. Dhyani S.N.: I.L.O. and India.

Statutes Referred:

Minimum wages Act 1948,

Payments of wages Act 1936,

Equal Remuneration Act 1976,

Industrial Disputes Act 1947,

Websites Refferred

1 http://www.economicsdiscussion.net/wages/wages-definition-types-and-other-
details/7450
2 www.shareyouressays.com/.../12-main-objectives-of-national-wage-policy-in-india
3 http://shodhganga.inflibnet.ac.in/bitstream/10603/63658/6/06_chapter%201.pdf

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