Mains Paper 2: Governance | Government policies and interventions for development in various sectors and issues arising out of their design and implementation.
From UPSC perspective, the following things are important:
Prelims level: Minimum wage determination criteria
Mains level: Minimum wages for workers
- Central trade unions have called a nationwide strike today to protest the government’s announcement of a hike in minimum wages for workers.
Why are the trade unions not happy?
- The government has announced a 42% increase in minimum wages for unskilled non-agricultural workers in central sphere.
- Employees of the central government and allied departments and undertakings, for category ‘C’ areas from Rs 246 a day to Rs 350 a day — or Rs 9,100 for a month of 26 working days.
- A, B and C category areas are determined broadly on the basis of their urban/rural profile.
- The trade unions had demanded statutory minimum wage for all workers of not less than Rs 18,000 per month.
Who will benefit from the increase?
- The minimum wage revision will be applicable to central government employees in its scheduled employment, in line with the provisions of the Minimum Wage Act, 1948.
- Currently, there are 45 scheduled employments under the central sphere, including agriculture, stone mines, construction, non-coal mines, and loading and unloading, and around 1,679 employments of states.
How is the minimum wage determined?
- The norms for determining the minimum wage were recommended by the Indian Labour Conference in 1957.
- It decided that the minimum wage should be need-based, and should ensure the minimum human needs of the industrial worker.
- Five norms were suggested:
- Three consumption units for one earner in a standard working class family, with the earnings of women, children and adolescents in the family being disregarded.
- Net intake of 2,700 calories for an average Indian adult of moderate activity.
- Per capita consumption of cloth of 18 yards per annum, which would mean for the average worker’s family of 4 a total 72 yards.
- Rent corresponding to the minimum area provided for under the Subsidised Industrial Housing Scheme for low-income groups.
- Fuel, lighting and other miscellaneous items of expenditure to constitute 20 per cent of the total minimum wage.
- In 1991, the apex Court, in Raptakos & Co. Vs its workers, ruled that children’s education, medical requirement, minimum recreation including festivals, ceremonies, provision for old age and marriage, should constitute 25%, and be used as a guide for fixing the wage.
- These six criteria are considered by the central and state governments to fix the minimum wage.
- The minimum wages include basic and variable dearness allowance, which is revised twice a year based on Consumer Price Index (Industrial Worker).
Why is there a disparity in minimum wages across India?
- Based on the recommendations of the National Commission on Rural Labour in 1991, a National Floor Level Minimum Wage was proposed in order to have a uniform wage structure across the country.
- In 1996, the NFL Minimum Wage was fixed at Rs 35 per day, which was revised in subsequent years and currently stands at Rs 160 per day.
- Since this Wage does not have statutory backing, it is not mandatory for states — although they are advised to fix minimum wages at not less than the National Floor Level Minimum Wage.
- Some states such as Kerala and Delhi already have a higher minimum wage for unskilled labourers than what has been announced by the government.
- However, in the absence of legal backing, the lowest minimum wage drops very low.