Double rate in offing?

Minimum Daily Wage

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