Minimum Wages Act

Introduction

The Minimum Wages Act, 1948 is an act of parliament concerning Indian labor law that sets minimum wages that must be paid to skilled and unskilled labor. The Minimum Wages Act was introduced in India in 1948 after independence, giving both the central government and state government jurisdiction in fixing wages. A basic standard of living prevails in India. Everybody has a right to live according to that. A ‘living wage’ is defined as a level of income for a worker which will ensure a basic standard of living which includes proper food, clothing, shelter, and education. India is a labor-intensive country. India is also the main attraction for hundreds of foreign companies because of its cheap and efficient labor availability. Earlier the laborers were exploited by the company owners or the big landlords. They were not paid the fair wages and they had to work for more than 12 hours a day. This was a clear exploitation of the laborers.  The makers of the Indian Constitution took notice of this situation, and decide to introduce the minimum wage act so that a basic standard of living is ensured for the laborers.  A minimum wage will ensure efficiency as well as a basic standard of living for laborers. However,  to keep in mind the industry’s capacity to pay the Constitution has defined a fair wage. A fair wage is that level of wage that not just maintains a level of employment but seeks to increase it keeping in perspective the industry’s capacity to pay. both the central government and the state government are given the jurisdiction in fixing wages. This act is statutory and not legally binding. Various boards are even set up for the proper review called wage boards. If any labor is paid below the minimum wage rate, it is called forced labor. The wage board ensures that the industry pays the laborers according to its capacity so that at least they can afford a basic standard of living. Under the law, wage rates in scheduled employment differ across states sectors, skills, regions, and occupations owing to the difference in cost of living, regional industries’ capacity to pay, consumption pattern, etc. Also, this act does not provide any discrimination between men and women, both are treated equally and gets equal pay for doing similar work.

History

  • 1929: K.G.R. Chaudhary recommended setting up wage boards for determining wages for each industry.
  • 1945: The first bill on minimum wages was drafted.
  • 1946: The central legislative assembly on the recommendation of8th standing labor the committee introduced a bill on minimum wages.
  • 1947: Representative of laborers, employers, and government attended a government conference post-independence. They defined minimum wages should not only provide for subsistence but should be enough for maintaining a basic standard of living. That should be enough for education, food, clothing and medical requirements.
  • 1948: The Act was eventually passed and was made effective from 15th March. Under the act, a tripartite committee “The Tripartite Committee of fair wages” was appointed that set definition and guidelines for formulating a wage structure in India. A fair wage is basically a level of wage that not just maintains a level of employment but seeks to increase it keeping in perspective the industry’s capacity to pay.
  • 1957: Some norms were added in the 15th labor conference in the fixation of minimum wages like:
  • The cost of at least 3 consumption units.
  • Clothing requirements fulfilled.
  • 20 % of the minimum wage should be the cost of fuel and miscellaneous items of expenditure.
  • Rent of the minimum area as specified by the government’s industrial housing scheme.
  • 1991: After the judgment in the case of Reptakas & Co. Specified that 25% of the minimum wage should account for the children’s education.
  • 2007: The Tamil Nadu state government announced that it has fixed minimum wages for 90% of its occupants.
  • 2008: women working in houses marched in Salem for the fixation of minimum wages for household maids and servants.
  • 2015: The national floor level of the minimum wage was raised to Rs.160 per day.

Broad features

  • Section 3: This act lays down the principles for the fixation of
  • A minimum time rate of wages.
  • A minimum piece rate.
  • A guaranteed time.
  • Overtime for different locations, localities or classes of work and for adults, adolescents and children’s.
  • Section 4: The minimum wage may consist of:
  • A basic rate of wages and the cost of living allowances.
  • A basic rate of wages with or without the cost of living allowance and the cash value of the concession in the respect of essential commodities supplied at concessional rates.

Issues

Till now too 42% of the wage earners receive wages below the national minimum wage floor. Also, female workers are more likely to receive relatively less than men’s and below a minimum wage. Mostly the laborers are illiterate and have no mid-level education so they are most likely to be paid below a minimum wage. The implementations and enforcement of this act are dismal and marginalized groups and individuals suffer the most. The government has issued many amendments for the benefit of the marginalized groups of our society such as revision of wages every 5years accordingly. Some of the issues are:

  • Large unemployment: Employment isn’t ensured in our society. Due to unemployment, many workers out of desperation accept a wage below the minimum wage. Workers are too oppressed and weak to demand their rights. They have to earn a living for their families so out of desperation, most of the time have to accept a wage below the minimum wage. Because of this, the employer holds the power to offer employment below the minimum wage rate.
  • Less protection against inflation: wages are not revised regularly or as frequently as prescribed in the norms. It is said that the revision of wages every 5, three, or even alternate years will help the laborers, to live a basic standard of living and will also improve it a bit. Also, the laborers are not provided with a dearness allowance, Which acts as a safeguard against inflation.
  • Lack of awareness: Most of the laborers aren’t even aware of the minimum wage rate. 80%of the workers are earning less then the minimum wage rate. There should be more awareness among the Labor class people so they are not exploited by the employer in any way.
  • Delays and inaction: There are often delays in the appointment of the committees for fixation and revisions of the wages. There are so many industries that do not fall under this act as their minimum wages are yet to be fixed. There are so many districts in which permanent labor inspectors have not been posted.

Enforcement

The central government is the proper authority for the enforcement of the act.  Scheduled employment is carried The Railway administration and mines oil field, Major ports, and cooperation established by central charge.  the chief Labor Commissioner is charged under The central level and at state level officers in Industrial Relations are charged for enforcement act and other labor laws.

Scope and Coverage of the Act

  • The act applies to the payment of wages to a person employed in any factory or railway establishments.
  • It also applies to industrial or other embellishments specified in Section 2 (ii)
  • Factory means a factory as defined in Section 2(m) of the factories act.
  • Industrial or other embellishment specified in Section 2(ii) are – tramway or motor transport service, Air Transport service, dock wharf or jetty or inland vessels, mines, Query, or oil fields, plantation, workshops in which articles are produced and manufactured.
  •  The act can be extended to other establishments by the Central and the state governments.
  • The philosophy behind the establishment of this act is to provide labor from any kind of exploitation
  • This act empowers the central and the state government, to fix minimum wages for the laborers to live a basic standard of life.

Minimum wages in different states

Since the state government is empowered to set independently the minimum wage rate, disparity between the neighboring states arises. To solve this central government has set up 5 regional committees:

  1. Eastern Region: West Bengal, Orissa, Bengal, Jharkhand, Chhattisgarh and Andaman and Nicobar Island
  2. North Eastern Region: Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Tripura, and Sikkim
  3. Southern Region: Andhra Pradesh, Karnataka, Kerala, Tamil Nadu, Puducherry and Lakshadweep
  4. Northern Region: Punjab, Rajasthan, Himachal Pradesh, Jammu and Kashmir, Haryana, Uttar Pradesh, and Chandigarh
  5. Western Region: Maharashtra, Gujarat, Goa, Madhya Pradesh, Dadra and Nagar Haveli and Daman and Diu.

Questions:

  • Define fair wages.
  • Define living wages
  • State the issues regarding this act.
  • What are the broad features of this act?
  • Explain the scope of the act.

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