Events
& Issues
New Delhi, 27 February 2019
Minimum Daily Wage
DOUBLE RATE IN OFFING?
By Dhurjati Mukherjee
A committee,
appointed by the Centre, has recently recommended an improved formula on
minimum daily wage, based on workers’ families spending on balanced diet meal and
non-food expenditure. The rate, it suggested should not be less than Rs 375 for
the work done in government, private establishments and individuals, which is more
than the notified Rs 176. If accepted, almost all States will have to increase
minimum wage rates.
The report titled
“Determining the Methodology for Fixation of the National Minimum Wage,” has
been prepared by the committee, headed by Anoop Satpathy, a Fellow at the VV
Giri National Labour Institute, with six members including officials from the
International Labour Organisation and the labour Ministry. It has recommended
five slabs of wages based on region with amounts varying between Rs 342 and Rs
447, based on July 2018 prices.
Last year, The India
Wage Report published by ILO found that the wage rates of many States were
below the minimum floor-level rate. Taking into account various factors, the Satpathy
committee has departed from the usual formula of fixing minimum wage rate based
on food and other items expenditure and prescribed another based on balanced
diet which factors in a ‘minimum threshold of calories, proteins and fat for
the wage-earner--the requirements of which should include 50 grams of protein
and 30 grams of fat a day’. It has also included non-food expenditure such as
the money spent on house rent, clothing, fuel, electricity, education, medical
care, footwear, entertainment and conveyance.
Presently, the wage
rates under the programme differ from State to State and in no State is the
amount close to the proposed national minimum wage. In most States, the wage
varies between Rs 165 to Rs 190. Importantly, if the committee’s
recommendations are accepted, then the wages paid under Mahatma Gandhi National
Rural Employment Guarantee Act (MGNREGA) will not only have to be raised but revisions
will need to be done every six months instead of a year and the changes will
have to be calculated on a formula that factors not only food items but also
non-food ones.
It
is a well known fact that wage disparities in the country has for long been an
area of concern. In a report released sometime back, the ILO found that State
governments often set their minimum wages lower than the recommended national
minimum wage. Apart from inter-State variations, the wage is unrelated to the
cost of living for the same kind of job. This is because the Minimum Wages Act
of 1948 does not say on what basis the minimum wages should be fixed or
revised. At that time a committee defined three levels of wages – the living
wage, the fair wage and the minimum wage. The minimum wage was defined as
subsidence wage plus ‘standard’ wage, the latter being left undefined.
The
Minimum Wages Act empowered the States to set a variety of wages and revise
them at periodic intervals, not exceeding five years. Such revision is
obviously aimed at ensuring that wages are in tune with the socio-economic
realities and take into account inflation. However, it is known that the
minimum wages have often been revised “somewhat arbitrarily, without full
consultation with social partners”. Moreover, it is found that nearly a third
of the country’s workers were paid less than the minimum wage in 2009-10 and
women were in general paid less than men.
Recall a Code on
Wages Bill was introduced in Parliament in August 2017, which provides for
introduction of a binding national minimum wage (NMW). This includes
stipulating a single NMW or different minimum wages for different States or
geographical areas.
The
variance in wages among States is definitely a matter of concern. The wage for
agricultural labour was as low as Rs 80 in Arunachal Pradesh and Rs 92 in
Odisha though it was higher in Mizoram at Rs 170 and Haryana at Rs 178 in 2013.
As regards Maharashtra, which occupies the highest share of such workers, the
minimum wage was 73 per cent lower than the national minimum wage in 2013,
according to an old report.
While
the disparities are quite manifest, what needs to be stated is that most
workers are paid around 20 per cent lower than the minimum wage but forced to
sign on the dotted line. The aspect of corruption being pervasive as regards
wages is prevalent both in the government and private sectors. Some analysts
have found that the panchayats pay much less compared to the private sector.
However, in the latter, the duty hours are often extended beyond the
permissible eight hours with a short break.
All
this clearly reveals that the bottom segment of the population can be categorised
as exploited, the obvious reason being wage inequality leading to consumption
inequality. In
India, the structure of employment and the sources of labour income have
changed over course of time. In particular, labour is increasingly engaged
informally, either through a rise in the number of informal workers in the
informal enterprises or an increase in the hiring of workers informally in the
formal enterprises, the latter being referred to as ‘casualisation’ of the
workforce.
It has been seen that
firms create a dual structure within their enterprises, preferring to hire
unskilled workers as contract/temporary staff rather than as regular workers.
However, formal firms, having access to financial capital and hence, more
advanced technological processes, have preference for skilled workers and hence
pay higher wages, generating larger income disparities.
It is no secret that
in the informal sector, exploitation of labour in terms of low wages is a case
for serious concern. The government is not completely oblivious to this
development but has taken no action taken to ensure that the minimum wages are
paid to the employees. Some units do not show their workers as employees and
give them much lower wages than stipulated and lower than minimum wages.
It goes without
saying there is need to adhere to a minimum wage policy that ensures decent
livelihood to workers – both in the field and factory. Moreover, the wage
should be more or less uniform in the States so that the informal sector
workers are not deprived. There is need also that there be strict monitoring
regarding the actual wages paid to workers in government projects as also what
the private sector pays to its employees.
Obviously, questions
may arise about government resources that need to be mobilised for the hike in
wages. This must be considered a priority area and cuts in unnecessary expenses
be given a serious thought. For there needs to be genuine concern for field
workers and his welfare must take precedence. The Ministry of Labour has uploaded
the recommendations on its website for public feedback and the final call will
be taken by the Centre in consultation with Ministry’s Central Advisory Board
on Wages, State governments, trade unions and employers. --- INFA
(Copyright, India
News & Feature Alliance)
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