Saturday, June 6, 2020

Code on Wages Bill – Modi Govt’s Return Gift to Corporates 

R Karumalaiyan 

THE Narendra Modi government has brought the Code on Wages Bill as a payback to the bourgeoisie, both domestic and foreign, who had helped him retain power for a second term with an improved majority in the recent parliamentary election. The Bill, which seeks to replace four wage-related legislations on the pretext of “simplification” and “rationalisation”, was introduced in Lok Sabha on July 23 and passed on July 30. 

Immediately after assuming office, the present rightist political dispensation, true to its class character, embarked on two major projects of dispossession of “Labour and Land (peasantry)” that, in the face of fierce countrywide joint struggles by the working class and peasants, were postponed during its last tenure. It may be recalled that the government was compelled to withdraw its Land Acquisition Bill in the previous Lok Sabha. Similarly, the Wage Code Bill of 2017 was introduced on the last day of Monsoon Session (August 10), but due to sustained protests it was referred to the Parliament Standing Committee on Labour on November 21 and then allowed to face its natural death. Now, the government has brought it back as the Code on Wages Bill, 2019. It will replace four related legislations -- the Payment of Wages Act, 1936; the Minimum Wages Act, 1948; the Payment of Bonus Act, 1965; and the Equal Remuneration Act, 1976. 

It is more relevant here to mention the Global Hunger Index brought out annually by the International Food Policy Research Institute (IFPRI). India occupies 100th rank among the 119 nations with only two other Asian countries, Pakistan and Afghanistan, below it. But what IFPRI has highlighted is that, notwithstanding the official talk ad nauseam about “development” and the jejune crowing over India’s emerging as an “economic superpower”, ours is a woefully hungry nation, one of the hungriest in the world. It is a symptom of the lack of concern for the poor working people as the nation has no wage policy for low wage earners. Moreover, the International Labour Organisation (ILO), in its India Wage Report, acknowledges that “low pay and wage inequality persists in India despite 7 per cent annual average gross domestic product (GDP) growth over the past two decades”. 

According to Azim Premji University’s Center for Sustainable Development Report, more than 57 per cent of regular wage earners in India have been earning less than Rs 10,000 per month, well under the 7th Pay Commission-stipulated minimum wage of Rs 18,000. Around 59.3 per cent casual workers are getting monthly wage of less than Rs 5,000. If we add the 25 per cent in the wage bracket of Rs 5,001-7,500, it is more horrific to note that around 84.3 per cent casual workers are getting less than Rs 7,500 as wage. Contract workers account for 66.7 per cent in this wage bracket. 

Given this precarious situation prevailing in our country and when all Central Trade Unions have been struggling for decent minimum wages for long, there must be a legal mechanism for the fixation and payment of minimum wages in the country. 

So, when an enactment is being brought in, the main areas of concern for low-paid workers are – who is called as ‘worker’, who is ‘employee’. Whether he/she will come under this Act or not? What is the definition of the term ‘wage’, how wages are being calculated/determined and on what basis/criteria are they determined under the Act? 

Minimum wages can be an effective tool for addressing poverty and inequality. In India there are a number of issues and concerns with regard to the setting and implementation of minimum wages. However, there are well-tested mechanisms/formulas that have been evolved over years, which also have a consensus of all stakeholders, ie, central and state governments, all Central Trade Unions and employers bodies, that could be put in place to address these concerns and ensure that minimum wages have a substantial and beneficial impact on subsistence wage and low-paid workers. But the Code on Wages, 2019 miserably fails to address these two main concerns -- that is on fixation of minimum wage and strict implementation thereon. The fixation has been deliberately kept under the discretion of the governments and the Bill seeks to dilute, virtually nullify, even the existing enforcement mechanisms so as to facilitate the employers to evade any legal obligations. 

The hidden agenda starts with the definition of ‘worker’ itself. There are two definitions -- one as “employee” and another as “worker” -- so as to facilitate the employer to misinterpret and discriminate between them and thereby escape from the Code itself. For instance, under clause 2(k) in the definition of “employee” – working journalists and other newspaper employees and sales promotion employees were excluded; whereas they are all included while defining ‘worker’ under the clause 2(z). In Chapter-III which deals with payment of wages, no where could we find the term “worker”. This may lead to their total exclusion from the purview of this Code. 

Clause 2(y), which defines “wage”, simply includes basic pay, dearness allowance and retaining allowance, if any, only. It may be used for minimum wages. But for general usage of this term throughout the Code, as it deals with payment of wages and bonus etc., where the definition of wage ought to have vital meaning, it is fraught with great danger. Now the present Code excludes overtime allowances, payments of leave and holiday wages etc, from the definition of “wage”. On non-payment of these, the workers do not have any legal remedy under this Code. But the Payment of Wages Act of 1936, which is going to be repealed by this Code, included all these in the definition of “wage” for purpose of legally ensuring its due payment. Now we can understand the great conspiracy behind this so-called ‘simplification’ and amalgamation of four laws into one Code that deprives the workers of their right to approach any legal authority for the denials of holiday wage, any payment for leave period and overtime allowances. The irony is that even in the Code on Wages Bill of 2017, the ‘wage’ was to some extent clearly defined for the purpose of ensuring payment of wages as it was defined under the 1936 Act. Now, the Modi regime is more emboldened to obediently serve and support the capitalist class at the cost of the working people. 


The Minimum Wage Act of 1948 is older than even our Constitution. Though its objective is “to prevent exploitation of the workers”, it aimed at fixation of some sort of minimum wages which the employer must pay. In 1961 itself, the Supreme Court held that if an employer finds it difficult to pay minimum wage, he has no right at all to run the business. Yet the criteria for minimum wage remained elusive. When the Act was silent on criteria/norms of minimum wage, the 15th Indian Labour Conference (ILC) held in 1957 had resolutely stepped in and unanimously recommended the formula for fixing minimum wage. The recommendations and the Supreme Court directions are as follows: 

1) Per capita food intake of at least 2,700 calories for a worker’s family comprising three units (two adults and two children) 

2) Per capita cloth of at least 18 yards per annum 

3) Provision of housing as per minimum rent charged by the government industrial housing scheme for low-income category 

4) Fuel, lighting, miscellaneous expenditures to constitute 20 per cent of the total minimum wage 

5) The Supreme Court judgment (1992) stipulated additional 25 per cent of the minimum wage for education, medical expense, recreation and provision of old age and marriage 

Moreover, the 44th Indian Labour Conference’s Committee on Minimum Wages unanimously recommended that “there was consensus that the government may fix minimum wages as per the norms/criteria recommended by the 15th ILC (1957) and the directions of the Supreme Court in the 1992 case.” When the Code on Wages Bill, 2017 was referred to the Parliament Standing Committee on Labour, it also unanimously recommended that “this wage fixation would also be in accordance with the recommendations of the 44th ILC (2012) and reiterated at the 46th ILC (2015) to remove arbitrariness and unwarranted discretion in the fixation of minimum wage”. 

Instead of accepting these more scientific consensus formula and incorporating the same in the existing Minimum Wages Act accordingly, the BJP-led government has introduced, with all arrogance and in utter disregard of the collective wisdoms of the Parliament and Supreme Court and ILCs, the Code on Wages Bill, 2019 with an aim to remove wage fixation process from the ambit of labour laws altogether. The new Bill deliberately leaves fixation of minimum wages to the discretion of the government -- both central and state. Though it provides for the constitution of a Minimum Wage Advisory Board, the recommendations of the boards are not binding on the governments. 

When a specific question was raised during Modi’s first tenure on why the consensus recommendation of the Indian Labour Conference on the minimum wages formula was not incorporated in the Code on Wages Bill of 2017, it was replied that this was done to “provide for flexibility, adaptability and to cater for dynamic requirements of various components...” Is any more proof required for the government’s intent on whose interests it wants to serve, the employers or the workers? 

Making policies that help the big corporates, both domestic and foreign, amass wealth by increased exploitation of the workers and the toiling people, is a major part of the neoliberal agenda, which the successive governments have been following since the last over 25 years. The BJP government led by Modi has further hastened and perfected this disastrous policy. 

The other major causality in the new Bill is ‘eight-hour working day’. Clause 13 of the 2019 Code deals with working hours and working day. Instead of categorically defining it, the Code states “the appropriate government may fix the hours of work which shall constitute a normal working day inclusive of one or more specific intervals”. The most draconian nature is that over 48 crore workers, for whom the Code is supposedly going to apply as is being touted by the ruling party, do not get to know their working hours from this Code and the sovereign Parliament has not been allowed to have its word on its largest working population’s working hours. 


If minimum wage is denied or delayed, no authority of this land can enter any establishment unless he gets the necessary sanctions from Delhi. Inspectors who are supposed to ensure the implementation of this Code have been rechristened as “Inspector-cum-Facilitator” under Chapter-VII. Clause 51(2) says that “the appropriate government may lay down the inspection scheme, in which (it) may provide for generation of a web-based inspection”. Thus, the binding character of inspection/enforcement is totally diluted making the relevant provisions of the law practically meaningless to the workers. The Code intends to produce perennial wage slaves so as to sustain the present ruthless exploitative system. The question of minimum wage is not merely an issue concerning low-paid workers, but also pertains to redistribution of wealth and equity and social justice. Let our resolve be redoubled to rebuff the attack of Capital and their Masters. 


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