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Bharat Bandh: Minimum wage, what it is, how it is fixed

Central trade unions have called a nationwide strike today to protest the government’s announcement of a hike in minimum wages for workers. Why are they angry?

Written by Aanchal Magazine |
Updated: September 2, 2016 10:21:03 am
bharat bandh, nationwide strike, bharat bandh strike, india strike, nationwide strike trade union, bharat bandh strike, news, minimum wage, trade union strike, strike, trade union strike, india strike, union strike, minimum wage hiked, arun jaitley, trade unions strike, india news In Guwahati on Wednesday, preparing for today’s strike. (Source: PTI)

The government on Tuesday announced a 42% increase in minimum wages for unskilled non-agricultural workers in central sphere, i.e., employees of the central government and allied departments and undertakings, for category ‘C’ areas from Rs 246 a day to Rs 350 a day — or Rs 9,100 for a month of 26 working days.

Workers’ bodies, however, are not pleased, and 10 central trade unions, all except the RSS-affiliated Bharatiya Mazdoor Sangh, have decided to go ahead with their nationwide strike on Friday.

Why are the trade unions not happy?

The trade unions had demanded statutory minimum wage for all workers of not less than Rs 18,000 per month — implying a minimum wage of Rs 18,000 for workers in the ‘C’ category areas, and proportionally higher in the ‘B’ ‘nd ‘A’ category areas of Rs 22,320 and Rs 26,560 respectively. The government’s announcement is half that: Rs 9,100, Rs 11,362 and Rs 13,598 respectively. Also, the unions want an amendment in the Minimum Wages Act, 1948, to provide for universal coverage for minimum wages for both permanent and contract workers. A, B and C category areas are determined broadly on the basis of their urban/rural profile.

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Who will benefit from the increase?

After notification by the central government, the minimum wage revision will be applicable to central government employees in its scheduled employment, in line with the provisions of the Minimum Wage Act, 1948. Currently, there are 45 scheduled employments under the central sphere, including agriculture, stone mines, construction, non-coal mines, and loading and unloading, and around 1,679 employments of states.

States may notify minimum wages only if there are more than 1,000 workers in a particular employment. The Report on the Working of the Minimum Wages Act, 1948 by the Labour Bureau states that as of December 31, 2013, the largest number of scheduled employments were reported by Assam at 105, followed by Bihar (88), Jharkhand (88), Odisha (84), Karnataka (79), Kerala and Tamil Nadu (73), Daman and Diu (72) and Maharashtra (67). The lowest number was 1 — from Mizoram.

How is the minimum wage determined?

The norms for determining the minimum wage were recommended by the Indian Labour Conference in 1957, which decided that the minimum wage should be need-based, and should ensure the minimum human needs of the industrial worker. Five norms were suggested:

* Three consumption units for one earner in a standard working class family, with the earnings of women, children and adolescents in the family being disregarded.
* Net intake of 2,700 calories for an average Indian adult of moderate activity.
* Per capita consumption of cloth of 18 yards per annum, which would mean for the average worker’s family of 4 a total 72 yards.
* Rent corresponding to the minimum area provided for under the Subsidised Industrial Housing Scheme for low-income groups.
* Fuel, lighting and other miscellaneous items of expenditure to constitute 20 per cent of the total minimum wage.

In 1991, the Supreme Court, in Raptakos & Co. Vs Its workers, ruled that children’s education, medical requirement, minimum recreation including festivals, ceremonies, provision for old age and marriage, should constitute 25%, and be used as a guide for fixing the minimum wage.

These six criteria are considered by the central and state governments to fix the minimum wage. The minimum wages include basic and variable dearness allowance, which is revised twice a year based on Consumer Price Index (Industrial Worker).

But why is there a disparity in minimum wages across India?

Based on the recommendations of the National Commission on Rural Labour in 1991, a National Floor Level Minimum Wage was proposed in order to have a uniform wage structure across the country. In 1996, the National Floor Level Minimum Wage was fixed at Rs 35 per day, which was revised in subsequent years and currently stands at Rs 160 per day. Since the the National Floor Level Minimum Wage does not have statutory backing, it is not mandatory for states — although they are advised to fix minimum wages at not less than the National Floor Level Minimum Wage.

Some states such as Kerala and Delhi already have a higher minimum wage for unskilled labourers than what has been announced by the government, but in the absence of legal backing, the lowest minimum wage can drop very low.

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