MINIMUM WAGE LEGISLATION

History
The minimum wage has a strong social appeal, rooted in concern about the ability

of markets to provide income equity for the least able members of the work force. For some people, the obvious solution to this concern is to redefine the wage structure politically to achieve a socially preferable distribution of income. Thus, minimum wage laws have usually been judged against the criterion of reducing poverty. Statutory minimum wages were also proposed as a way to control the proliferation of sweat shops in manufacturing industries. The sweat shops employed large numbers of women and young workers, paying them what were considered to be substandard wages. The sweatshop owners were thought to have unfair bargaining power over their workers, and a minimum wage was proposed as a means to make them pay "fairly". Over time, the focus changed to helping people, especially families, become more self sufficient. Today, minimum wage laws affect workers in most lowpaid fields of employment

TABLE: LABOUR LEGISLATIONS INFLUENCING WAGES IN THE INFORMAL SECTOR IN INDIA

Labour legislation The Minimum wage Act, 1948 Type of intervention

To provide minimum compensation for work. Workers in scheduled employment to be paid minimum wage.
To enable workers of a number of small units to form unions, who can bargain wages and other condition of work.

The trade Union Act, 1926

The Industrial Dispute Act, 1947

To enable unions to raise industrial disputes on wages and the conciliation machinery to intervene.
Assure equal wage to women for same or similar work. To regulate the manner of payment of wages and their realisation in case of non-payment.

The Equal remuneration Act, 1976 The Payment of wages Act, 1936

Meaning
A minimum wage is the lowest hourly, daily or monthly

remuneration that employers may legally pay to workers. Equivalently, it is the lowest wage at which workers may sell their labor.

Minimum Wages Act,1948

Enacted to safeguard the interest of workers,mostly in the

unorganised sector by providing fixation of minimum wages in certain specified employments It binds the employers to pay their workers the minimum wages fixed under the Act from time to time. Under this act, both Central and state governments to fix,revise, review and enforce the payment of minimum wages to workers in respect of scheduled employments under their respective jurisdictions at intervals not exceeding five years. The Central Government appoints a Central. Advisory board for the purpose of advising Central and State governments in matter of fixation and revision of minimum wages as well as coordinating work of Advisory Boards.

Minimum Wages Act,1948(Contd.)

Two Methods
Committee 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.
Notification Method Government proposals are published in the official Gazette for informations of the persons likely to be affected thereby and specific dates not less than two months from date of notification on which the proposals will be taken into consideration

Minimum Wages Act,1948(Contd.)

Factors
Level of income and paying capacity Prices of essential commodities Productivity Local conditions Introduction of National Floor Level Minimum Wage

Five Regional Minimum Wages Advisory committee are: Eastern Region North Eastern region Southern Region Northern Region Western Region

Minimum Wages in India

Indian economy is characterised by dualism Organised/Formal sector Unorganised/Informal sector Informal sector contribute to more than 60% to Indias GDP growth Labour laws for most workers in informal sector are enforced by State Government Contractors and casual workers is regulated by central governments. These policy was developed in order to promote fair wage agreements in more organised industries Organised Sector Wages are decided through negotiations and settlements between employers and employees Unorganised Sector Labour is vulnerable to exploitation due to illiteracy and does not have effective bargaining power, so intervention of government becomes necessary.

Fixation of Minimum Wage rate

Function Time Rate Piece Rate Different scheduled employments Different works in same employment Period Hour Day

Guaranteed time rate

Overtime rate

Adult, Adolescent and children

Different Locations Male/Female

Month
Any other period

Current Minimum Wage Rate

No. of scheduled employments Central sphere 45 State sphere 1650 National Floor level Minimum Wage Rate 2009 Rs 100 per day 2011 Rs 115 per day
Introduction of VDA(Variable dearness Allowance)

GENERAL NORMS FOR FIXING MINIMUM WAGES

The fixation of minimum wage depends upon various

factors like socioeconomic and agro-climatic conditions, prices of essential commodities, paying capacity and the local factors influencing the wage rate. It is for this reason that the minimum wages vary across the country.

ISSUES IN WAGE POLICY

Minimum wages are expected to cover the essential

current costs of accommodation, food and clothing of a small family. The Minimum Wage Act, while being very progressive has led to specific problems. Doubts have been raised on the existence of a clear and coherent wage policy in India particularly in unorganized sector. This is mainly due to its poor norms of fixation, enforcement, implementation and coverage in various parts of the country.

SOME OF THE ISSUES AND CONCERNS FACED IN INDIA REGARDING MINIMUM WAGES
Norms for fixing minimum wages Coverage

Implementation
Enforcement

SOME OF THE ISSUES AND CONCERNS FACED IN INDIA REGARDING MINIMUM WAGES

(1) NORMS FOR FIXING MINIMUM WAGES

The Act does not set out a minimum wage in rupee terms but

just stipulates that the wage be a living wage which is to be decided by each state The Act stipulates that minimum wage rates are to be revised keeping in mind inflation the guidelines laid down for the minimum wage by the 15th Indian Labour Conference (ILC) and the Supreme Court suggest that a minimum wage for 8 hours of work should be high enough to cover all the basic needs of the worker, his/her spouse and two children.

SOME OF THE ISSUES AND CONCERNS FACED IN INDIA REGARDING MINIMUM WAGES

(2) COVERAGE
In order to have minimum wage fixed, the

employment or industrial activity has to be included in the schedule of Employments. Currently the number of scheduled employments in the Central government is 45 whereas in the state sphere the number is 1232.

SOME OF THE ISSUES AND CONCERNS FACED IN INDIA REGARDING MINIMUM WAGES

(3) IMPLEMENTATION
The main problem of minimum wage legislation in India is its poor implementation. Whether laying down a decent wage for workers is workablewell, the problem is the demand/supply equation. There is a large supply of cheap labour and this is what keeps the wages of the domestics low. Therefore the rules would be difficult to implement. However, as domestic workers unions get stronger, employers may be forced to shell out the required

amounts

SOME OF THE ISSUES AND CONCERNS FACED IN INDIA REGARDING MINIMUM WAGES

(4) ENFORCEMENT

Poor enforcement of the Act is another issue prevalent in

most of the states in India. This is mainly due to lack of awareness amongst the workers about minimum wage provisions and their entitlement under the labour laws. This is particularly true in remote areas and in areas where workers are not unionized or otherwise organised. As a result their wages have long since failed to keep pace with rising costs and continue to diminish in real value over time.

NEED FOR MEANINGFUL MINIMUM WAGE POLICY

In spite of vast number of workers in unorganized sector,

and their substantial contribution to the national economy, they are amongst the poorest sections of Indias population. It is therefore imperative that urgent steps are taken to improve their condition. The rates of minimum wages so fixed in few states, is not enough even for two times meal in a day, leave aside the needs of health, education and shelter.

 The main objective to be considered while fixing or

revising the minimum wage rate should be two fold (1) Social objective (2) Economic objective Two major initiatives for providing social security to the workers in the informal sector have been passed in the parliament (a) The National Rural Employment Guarantee (NREG) Act 2005 (b) the Social Security for Unorganized (Informal) Sector Workers

 Minimum Wage legislation in India requires the active

support of workers, trade unions, and labour associations. It would also require sincerity on part of the labour departments in each state to determine minimum wage rate on the basis of ethical and humanitarian concerns in order to ensure basic subsistence to workers in unorganized sectors