The concept of the Need-Based Minimum Wage has evolved
in India over sixty years of Independence and owes its origin to the Directive
Principles of the Indian Constitution and the welfare policy of the Government.
Its acceptance in principle connotes a public effort at an institutional
determination of wage rates particularly in the industrial sector of the
economy. Unfortunately the computation of the need based minimum wage has
become a controversial subject in the country. While the concept of what the
need based minimum wage should cover is fairly clear and generally accepted by
both the employer and employee, its actual assessment into monetary terms has
raised endless disputes not alone by the employer.
NEED-BASED MINIMUM WAGE FORMULA: Minimum wages for the
average family will have to be based on requirements of food, clothing, housing
and so on. Additional components of expenditure to cover for children’s education,
medical treatment, recreation, festivals and ceremonies.
In a vast country such as ours, there are bound to be
regional variations in these requirements owing to climatic conditions, food
habits, etc. At the same time in order to ensure a degree of uniformity the
Conference have adopted a certain norms. The food component carries the
largest- proportion of the total cost of living in a working class family. The
component’s significance is not only economic but human also. On food depends
the health and efficiency of the worker, which is vital to the industrial
production. After a protracted discussion the Conference adopted Dr. Aykroyd’s
second dietary prescription of the adequate diet level, the other one being the
optimum diet level. An optimum diet according to him, is one which ensures the
functioning of the various life processes at their very best; whereas an
adequate diet maintains these processes but not at their peak levels. The
optimum diet would include more of vitamins and less of proteins in its caloric
content, while the adequate diet would include more of proteins and less of
vitamins.
The Committee on Fair Wages laid down that the
standard working class family should be reckoned as one consisting of three
consumption units, supported by a single male earner and including his wife and
two children below the of age 14 The 15th Session of Indian Labour Conference
approved that the wage should cover four categories of needs considered
essential for the worker's well being, viz. food, clothing, housing and
miscellaneous. In calculating the minimum wage, the norms for the food category
should be based on Dr. W.B. Aykroyd’s formula for an adequate and balanced
diet. It thus came about that a wage linked to the needs was suggested as a
desirable minimum.
Subsequently, when attempting to implement the
recommendations of the conference, almost all the wage fixing authorities
including the committees appointed under the Minimum Wages Act, 1948 have
invariably faced difficulty in determining: (i) the calorific norm which should
form the basis of the diet content (ii) the exact composition of the diet (iii)
the qualities of the various items of diet and (iv) availabilities of food
commodities consumed by the worker and his pattern of consumption. In this
regard the first assault was launched by the II Central Pay Commission (1959),
pertaining to the calorific norm as laid down by the 15th Indian Labour
Conference. The Indian Labour Conference worked out the three-unit
formula, the minimum wage is worked out taking into consideration the calorific
value requirements of 2,700 each, certain length of cloth requirement, housing
rental value, education and medical expenses etc
The three-unit based formula to fix
minimum wages presently counts only four members of a family ie husband, wife and two children. It has no
provision to count dependent parents, if any, or even if there are more than
two children.
The three-unit formula gives the husband
a full unit, wife 0.8 unit, and 0.6 units for each of the two children.
Now the trade unions and
the employees associations are of the opinion that the three-unit system are not sufficient
to decide minimum wages because the children continue to stay with the family
for longer periods. The two children and wife should be accorded one single
unit instead of 0.6 units,” also, marriageable age of a child has also
increased and they should also be given full units, the gender equality should
also be observed instead of 0.8 units it should be full unit for the spouse.
Hence should be revised
to the four unit formula
gives the husband a full unit, wife full unit, and full units for each of the
two children.
After the 2010 Supreme
Court ruling that dependent parents are to be taken care of by children, two
more units should be added and the formula be based on six-unit formula than
three.
“The CrPC section 125
and Maintenance of Parents and Senior Citizens Act make it mandatory for an
earning member to maintain his parents, failing which he/she may have to face
penal consequences. Today, the average life span of a person has increased to
68.3 years compared to that of 41 years in 1957. Hence two additional units
have to be added,”
So there is a need to
hike number of units from three to six to calculate minimum wages.
What is the effect of
the minimum wage and the number of units, as far the Central Government
Employees are concerned the 7th CPC has evolved principle of 3 units
and the minimum wage is fixed at Rs 18,000/ if the units are increased to 4
units instead of 3 units the minimum wage shall have to be increased to Rs 24,000/ - .
Additional
components of expenditure to cover for children’s education, medical treatment,
recreation, festivals and ceremonies. This followed from the Supreme Court’s
ruling in the Raptakos Brett Vs Workmen case of 1991 for determination
of minimum wage of an industrial worker. The Supreme Court had prescribed this
amount at 25 percent of the total minimum wage calculated from the first five
components.
7th CPC
report Para no 4 has also dealt the issue
of a need-based minimum wage taking into the concept of the following.
a). normative family is taken to consist of a spouse
and two children below the age of 14. With the husband assigned 1 unit, wife,
0.8 unit and two children, 0.6 units
each, the minimum wage needs to address 3 consumption units;
b) . The food
requirement per consumption unit is shown in the Annexure to this chapter. The
specifications were derived from the recommendations of Dr. Wallace Aykroyd, the
noted nutritionist, which stated that an average Indian adult engaged in
moderate activity should, on a daily
basis, consume 2,700 calories comprising 65 grams of protein and around 45-60 grams of fat. Dr Aykroyd had
further pointed out that animal proteins, such as milk, eggs, fish, liver and
meat, are biologically more efficient than vegetable proteins and suggested
that they should form at least one-fifth of the total protein intake
c) The clothing requirements should be based on
per capita consumption of 18 yards per annum, which gives 72 yards per annum
(5.5 meters per month) for the average worker’s family. The 15th ILC also
specified the associated consumption of detergents
d) The prescribed
provision of Report of the Seventh CPC 63 Index 25 percent to
cover education, recreation, ceremonies, festivals and medical expenses has
been reduced to 15 percent.
Secondly the prices of
essential commodities for calculation of the minimum wage is always a debate ,
the price essential commodities by the using Consumer
Price Index for
Industrial Workers maintained by Labour Bureau, Shimla and the retail
prices
are showing different rates , the prices of essential commodities are at
higher
end compared to the retail prices including the state Government run
co-operative society’s . The retail prices of the essential commodities
are 15% more than the prices provided by the Labour Bureau, Shimla. If
proper retail prices are taken into
account the minimum wage shall be more than Rs 26,000/- as on 1st
Jan 2016.
Secondly the revision of payment of wages act, 1936 , the Government has raised the monetary
limit of wages to Rs. 24000/- per month for the applicability of the Act by
issuing the notification .This calculation of Rs 24,000/ is based on Dr.
W.B. Aykroyd’s formula. This is done on the basis of figures of the
Consumer Expenditure Survey published by the National Sample Survey
Organization.
The payment of wages act, 1936 monetary limit of wages to Rs. 24000/- per month is for
unskilled worker , if we add Rs 25% for skilled worker , it work out at Rs
30000/- for skilled worker which includes wages and allowances, at present the
Central Government employees at the initial stage are paid Rs 23,000/- (Rs 18,000/ as minimum
wage and Rs 5,000/ as allowances ), still there is gap of Rs 7,000/ , if the minimum
wage of Central Government employees is re fixed at Rs 21,000/ then this gap
shall be reduced.
The breakup of the Central Government employee’s salary is as
follows.
Non Metro City
Minimum wage Rs 18,000/-
HRA Rs 1800/-
Transport allowances Rs 900/-
Children education allowances Rs 2250/-
Total Salary : Rs 22950/-
The workers are deprived of the actual minimum wage. Hence we
should up this issue to logical conclusion .
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