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Towards an equitable minimum wage

Sentinel Digital DeskBy : Sentinel Digital Desk

  |  24 Dec 2015 12:00 AM GMT

The Central government is mulling a countrywide law on mandatory minimum wage, which has labour unions all agog about its likely provisions. While participating in a debate in the Lok Sabha, Labour minister Bandaru Dattatreya pointed out that minimum wage in the country being non-statutory, it has become necessary to bring forth a minimum wage bill with a legally binding provision, so that ‘every worker gets a fair wage’ along with job security and social security. Amendment to the Minimum Wages Act, 1948 is sought to ensure better compliance, because in 2010, only 61 percent workers in the country were found to have received minimum wages. This is in line with a recent cabinet note moved by the Labour ministry after marathon rounds of tripartite talks involving industry, labour unions and the government. Seeking to set a mandatory tiol minimum wage and merge four wage-related laws into one, the Labour ministry has argued that a tiol benchmark will ‘do away with discrepancies, improve the salary threshold and bring in pay parity’ across the country. As of now, the Central and state governments fix the minimum wage in different categories of work. Under the Minimum Wages Act, 1948, the Centre determines the minimum wage in 45 categories and the states in 1,679 categories. Each state decides on the minimum wage in its jurisdiction, with minimum wages varying from Rs 4,500 to Rs 9,500 a month for unskilled workers.

The country does have a floor minimum daily wage – currently fixed at Rs 160 per day. But since it is not legally binding, authorities can set the wage lower than Rs 160, if they think fit. Experts have pointed out that multiple authorities deciding wage rates make it difficult for workers to know what is their minimum wage, leave alone demanding it. This in turn worsens income inequality and poverty in the labour force, leading to all sorts of tensions in the workplace. The proposed tiol minimum wage will be fixed for unskilled as well as semi-skilled and skilled workers. This has huge implications for the country’s labour market, which is estimated to have more than 47 crore workers with around 1.2 crore entering the labour force every year. While labour unions have been demanding minimum wage of Rs 15,000 per month, the Seventh Pay Commission suggestion of Rs 18,000 minimum wage per month for government employees is certain to make labour unions revise their demand upwards. That the Central government has got a huge problem on its hands is apparent from labour unions taking serious issue with suggestions of minimum wage at Rs 273 per day or Rs 7,100 per month during negotiations to thrash out proposals for the draft bill. Union representatives angrily pointed out that this is less than half of what minimum wages should be according to Supreme Court guidelines and norms proposed in the Indian Labour Conference of 1957. In the 1992 Raptakos Brett vs Workers’ Union case, the Supreme Court ordered that 25 percent of the expenditure on food, cloth, rent and fuel should be added as expenses on education, health, etc. to calculate the minimum wage.

Upping the political pressure on the rendra Modi government to come out with a tiol minimum wages law, the Delhi government last November introduced its own amended minimum wages bill in the assembly. Under this bill, the fixing or revising of minimum wages for workers will take into account not only the ‘skill required, the arduousness of the work and cost of living’ but also ‘other components that the government thinks appropriate’. Chief Minister Arvind Kejriwal did not let slip of this opportunity to remind that the Delhi government is the first government set to implement the Supreme Court’s 1992 judgement on minimum wages. He also pointed out that under the existing law, there is a provision of imprisonment of up to six months and a fine of up to Rs 500 only for employers violating rules, but his government will make the law more stringent by increasing imprisonment up to three years and pelty to Rs 50,000. The Delhi CM also warned that action will be taken within three months against any organisation if complaint is received that it is not paying minimum wages to employees, and that organisations will have to upload the data of its employees on their websites. Keeping aside political one-upmanship, a more up-to-date and effective law for minimum wage applied tionwide is surely a welcome development. Without assured minimum wages, equitable contract rules, pension benefits, overtime allowance, health benefits, safety and sanitation at the workplace, governments in the country cannot talk of all-round economic progress with any degree of conviction.

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