LABOUR LAWS AMENDMENTS: Part 16

MINIMUM WAGES 

Bare minimum 

T.K. RAJALAKSHMI 

A daily-wage labourer at the Mumbai central railway station. Photo: Arunangsu Roy Chowdhury 

The expert committee of the Ministry of Labour and Employment appointed to fix the national minimum wage ignores accepted criteria and arrives at a figure lower than the one recommended by the Seventh Pay Commission. 

A Day after the cross-border operation by the Indian Air Force, on February 27, Prime Minister Narendra Modi addressed the National Youth Parliament Festival where he referred to the importance of multitasking for youths, exhorted them to enrol in the voters’ list and listed out the various achievements of his government. He said the opposition was obstructing work in the Upper House, leading to fewer Bills being passed. It was an all-out election speech targeting young voters. He did not mention employment prospects for youths or decent wages. 

On February 14, a report of an expert committee set up by the Ministry of Labour and Employment (MoLE) on the desirable national minimum wage was made public and its recommendations are seen as a major let-down for the working class. Interestingly, on March 5, Modi launched a pension scheme for the unorganised sector without saying a word about a decent minimum living wage for such workers. 

The expert committee was constituted in January 2018 and appeared to have been set up with a genuine concern to establish a methodology to determine minimum wage rates for various categories of labour. The report acknowledges that despite India’s long history of wage policy, wage-setting institutions and strong economic growth in the past two decades, low pay was pervasive and wage inequality very high. 

Yet, the committee has recommended rates even lower than what the Seventh Pay Commission had recommended. The report does not even consider the loss of wages and employment post-demonetisation, including the sharp wage cuts that people had to accept. The report says that average wages had increased faster for all categories but adds that regional wage disparities also grew. But the more worrisome recommendations pertain to how much a national minimum wage should be. 

Importantly, the unions were never consulted by the committee, in sharp contrast to the Central Advisory Council, which, in 1948, appointed a tripartite committee on fair wages. That committee had come up with landmark definitions of what constituted a minimum wage, a fair wage and a living wage. A living wage was defined as the highest wage level that enabled workers to provide for themselves and their families beyond the bare essentials of food and shelter, but also included certain “frugal comforts” like children’s education, health protection and essential social requirements and insurance against contingencies such as old age. But the living wage was only considered a desired goal or target as it was dependent on factors such as national income and the capacity of industry to pay. It is, therefore, hardly surprising that no government has enacted a policy whereby workers would get a “living wage”. The present committee does an even greater disservice to workers by prescribing a low bar for the national minimum wage on the basis of a reduced calorie intake while increasing the family unit size. 

As far back as 1948, the Fair Wages Committee drew a distinction between minimum and living wages, with fair wage falling somewhere in between the two. A minimum wage, therefore, was defined as one that provided for the sustenance  of life, that provided for the preservation of the e!ciency of the worker by enabling some measure of education, medical requirements and other amenities. Interestingly, minimum wages were usually fixed for those occupations in industries where workers were not protected by either collective bargaining or a statutory mode of wage fixation. 

The committee then recommended wage boards, some of which have statutory status, approved by Parliament. What was never passed or legislated was a Fair Wages Bill to fix the wages of employees working in factories and mines. Two committees of the government, set up in 1978 and 1991, recommended a national minimum wage, but there were divergent views on what a wage policy should be. One of them clearly articulated the interests of the employers in recommending that the “paying capacity” should also be considered even in fixing need-based minimum wage, which was in the range of the lower level of “fair wage”. 

In 1991, the National Commission on Rural Wages defined the minimum floor as the cost of living at the subsistence level for the worker and his family of three adult consumption units. It relied on a Planning Commission task force and the recommendations of an Indian Council of Medical Research (ICMR) task force regarding the calorie norms for rural and urban areas. The role of the Planning Commission in establishing guidelines for wage policy is an aspect that the MoLE expert committee recognises. It says that the Five Year Plans provided a baseline for labour market institutions such as collective bargaining and workers’ right to association. 

The Five Year Plans from the first until the seventh, while focussing on industrial development and labour productivity, were by and large pro-labour and advocated extension of wage boards to other industries, equal pay for equal work, better working conditions and setting up of tripartite wage boards. The eighth and the ninth Five Year Plans marked a distinct shift from the past and labour flexibility (hire and fire), labour reforms and skill development began getting prioritised. The capacity of industry to pay, productivity and profitability began to be considered more important in the determination of wage policy. 

It was in 1948 that the United Provinces’ Labour Enquiry Committee took the advice of the Nutrition Research Laboratory in Coonoor, Tamil Nadu, to determine a minimum level of sustenance that included a “cheap vegetarian diet” of 2,700 calories (which included milk, sugar, pulses, cereals and jaggery) to calculate the need-based minimum wage. The discussion in this committee and subsequent committees was on determining the cost of food and non-food items in order to fix a need-based wage at sustenance levels. In 1957, the Indian Labour Conference was categorical that minimum wages should be “need based and should ensure the minimum human needs of the industrial worker, irrespective of any other consideration”. A minimum wage should be one that provided for three adult consumption units; a net intake of 2,700 calories a day as recommended by the first Director of the Department of Nutrition, United Nations Food and Agricultural Organisation; clothing requirements of 65.8 metres a year for each  family; a minimum housing rent that the government charged for low-income housing groups; and fuel, lighting and other items that would constitute 20 per cent of the minimum wage. 

Guiding criteria 

These were supposed to be the guiding criteria for fixing minimum wages. Adequate justification needed to be given if anyone failed to comply with these criteria. These calorie norms were supposed to be converted to monetary values. The 2,700-calorie norm was for adults doing “moderate” activity. Clearly, those involved in hard labour were entitled to a higher minimum wage that would enable them to consume more calories than what was required for moderate activity. 

In 1992, a radical shift occurred when the International Labour Conference (ILC) cautioned against the trend of fixing minimum wages at “unrealistically high levels”. It was a period that coincided with neoliberal reforms in the economy. The concerns of labour were not high on the agenda of governments. Interestingly, in 1992 itself, the Supreme Court, in the famous Workmen... vs Raptakos, Brett & Co., held that the need-based norms recommended by the 15th ILC in 1957 ought to be the benchmark for determining minimum wages and that other additional components should also be included such as children’s education; medical requirements; minimum recreation such as festivals and ceremonies; and contingencies such as old age and marriage. 

In other judgments the Supreme Court held that minimum wage was a legal right and that no industry had a right to exist if it did not pay its workers a minimum wage and that employment at wages below the minimum wage was akin to forced labour. Six of the seven Pay Commissions used the ILC norms to calculate minimum wages. In 2015, the Seventh Central Pay Commission too confirmed that the ILC norms of 1957 were the “best approach to estimating the minimum pay as it is a need based calculation that directly costs the requirements, normatively prescribed to ensure a healthy and a dignified standard of living”. The Seventh Pay Commission recommended that Rs.18,000 be fixed as the minimum pay. 

The debate over what should be the monetary value for an adequate diet did not seem to be a settled one. So, the 15th ILC norms, which were based on the calculations of a nutritionist with over 30 years’ experience, pegged the figure at 

2,700 calories, which was upheld by the Supreme Court. The Second Pay 

Commission pegged the figure at 2,600 calories. What is surprising is that the 

2019 expert committee on minimum wages has further reduced the calorie norm to 2,400 calories while calculating the minimum wage. 

The International Labour Organisation’s (ILO) India Wage Report 2018 detailed wide disparities in wages across States and found evidence of wages being paid much below the non-statutory National Floor Level Minimum Wage. It is a fact that even the prescribed minimum wages in the country for scheduled employments are not complied with. There is also a school of thought that  believes that Indians were eating more but not the “right” stu" and that the drudgery of work (hard labour) had reduced and hence a lower calorie requirement should be considered. 

The fact that many items such as fruits, milk, pulses and even basic vegetables had disappeared from diets because of sheer una"ordability and precarious employment status had become the norm was never deemed important while calculating either calorie norms or minimum wages. This is the reason why the expert committee of the MoLE has recommended a lowered calorie norm and therefore a lower minimum wage as well. It says: “Given the current demographic structure of workers’ families and the proportion of population engaged in di"erent types of works as estimated from the EUS [Employment and Unemployment Survey] 2011-2012, the average calorie requirements for these families are estimated to be 2,400 kilo calories per person per day.” 

On the basis of latest evidence of consumer expenditure survey on nutritional intakes, per household consumption units and food and non-food expenditure, the expert committee recommended fixing the national minimum wage at Rs.9,750 a month, or Rs.375 daily. An additional house rent allowance of Rs.1,430 for urban areas was recommended. 

In order to calculate minimum wages, the committee also proposed increasing the number of consumption units from the earlier three to 3.6. On the one hand, calorie norms were reduced and on the other, the number of consumption units increased. The committee held that rather than a calorie-based consumption basket, a “nationally representative and culturally palatable food basket” ought to be the guiding principle, focussing on a balanced diet rather than calorie intake. Interestingly, close to 40 per cent of Indian children are stunted and almost 21 per cent under the age of five are severely wasted. Undernutrition and malnutrition have been recognised as having a generational impact. It is the absence of any kind of diet, balanced or otherwise, that is solely responsible for such a state. 

In a letter to the Union Minister for Labour and Employment, Tapan Sen, general secretary of the Centre of Indian Trade Unions (CITU), wrote that the expert committee report was trying to “befool the working class and the trade union movement”. He said that in making the recommendations, the Committee had reportedly claimed to have considered the overall framework and guiding principles of the ILC of 1957 and the Supreme Court judgment of 1992 in Workmen... vs Raptakos, Brett & Co. The recommendation, he said, was even lower than the one determined by the Minimum Wage Advisory Board of the Delhi government (Rs.14,000 plus) which had duly been notified. 

He also pointed out the recommendation pertaining to number of family units, where the expert committee had fixed the consumption units in every family as  3.6 while calculating the minimum wage, instead of three consumption units considered by the original formula passed by the ILC. He said it was “ridiculous that even after increasing the family size, the recommended minimum wage based on such increase has actually gone down than what was based on earlier family size”. He told Frontline that it was unfortunate that the expert committee, instead of formulating the minimum wage to ensure human survival of the working people, was more concerned with “ease of doing business” to facilitate employers to exploit workers. “We reject the recommendations in toto. The minimum wage or the national minimum wage should not be less than Rs.18,000 and should be linked with the price index,” he added. 

The recommendations of the expert committee could become a reality if the Bharatiya Janata Party-led National Democratic Alliance is elected in 2019. In some States such as Kerala, the minimum wages are much higher than what the committee has recommended. Apprehensions that employers might actually use such recommendations to push down wages are not unrealistic. The minimum wage level prescribed by the committee is not even subsistence level. It is not enough to guarantee the healthy survival of a family with 3.6 consumption units.