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Revised Monthly Wages for Workers
Context:
The Delhi government announced a revision in the minimum monthly wages for various categories of workers, including unskilled, semi-skilled, and skilled labour.
More on News:
- This move is seen as a step to improve the living conditions of workers in the capital and ensure that wage growth keeps pace with inflation.
- The revision of wages is in accordance with the Minimum Wages Act, which aims to ensure that workers are compensated fairly for their labour.
- The move is also in line with the Indian Constitution, which emphasises the right to a living wage and decent working conditions for all.
The Minimum Wages Act, 1948
- It is a significant piece of legislation in India aimed at safeguarding the interests of workers by establishing minimum wage standards for various types of employment.
- The Act was enacted to prevent the exploitation of workers by ensuring that they receive a minimum wage that reflects a basic standard of living.
Difference Between Fair vs Living Wage:
The concept of a fair wage is intricately linked to the capacity of the industry to pay. According to established definitions, a fair wage is characterised as follows:
- Lower Limit: The fair wage must be above the minimum wage.
- Upper Limit: The fair wage is capped by the industry’s capacity to pay, but it should be below the living wage.
Key Factors Influencing Fair Wage:
- Labour Productivity: The efficiency and output levels of workers can affect wage levels.
- Prevailing Wage Rates: Existing wages in the industry or region set benchmarks for fair wages.
- National Income Levels: The overall economic health and income distribution within the country play a significant role.
- Industry Capacity: The financial ability of businesses to pay higher wages is a critical determinant.
- A living wage should enable earners to provide not only for the basic necessities—food, clothing, and shelter—but also for a level of frugal comfort.
- Education for Children: Ensuring access to quality education.
- Health Protection: Guarding against ill-health and medical expenses.
- Social Needs: Addressing essential social requirements.
- Insurance Against Misfortunes: Providing a safety net for significant life events, including old age.
Key Aspects of Living Wage
- Beyond Minimum Wage: A living wage goes well beyond the minimum wage, reflecting a standard that supports a decent quality of life.
- Economic Considerations: The determination of a living wage takes into account the national income and the capacity of the industrial sector to pay.
Bridging the Minimum and Living Wage Gap:
- Minimum wages, rooted in ancient texts like Arthashastra, are essential for addressing persistent wage inequality and low pay in India, as a well-designed system can promote inclusive growth by reducing inequalities and alleviating poverty.
- The Minimum Wage Act of 1948 empowers Central and State Governments to establish minimum wages by occupation, skill level, and location, but the absence of specific norms for setting these wage levels has resulted in complexity.
- Several committees and conferences have advocated for the National Floor Level Minimum Wage (NFLMW), which has been periodically revised.
- Despite these efforts, significant disparities continue to exist due to regional variations in economic conditions.
- According to the Economic Survey of 2018-19, India has over 1,900 minimum wage rates across different occupations and regions, leading to complexity, lack of uniform criteria, and low compliance.
- Vulnerable groups, such as domestic workers, are underprotected, with many states not covering them.
- A well-designed system can reduce wage inequality, particularly for casual labour and women.
- Studies show that wage increases have had a stronger impact on regular wages, while the effect on employment remains minimal, especially in rural areas.
- According to the Economic Survey of 2018-19, there is often a gap between these two concepts, with the minimum wage not always sufficient to support a decent standard of living.
- The survey also suggested that periodic revisions, like the one announced by the Delhi government, are essential for narrowing this gap.
Legal and Constitutional Framework:
- The revised wages align with India’s broader legal framework concerning labour rights.
- Under Article 43 of the Directive Principles of State Policy in the Indian Constitution, the state must ensure that citizens receive a living wage, which supports a decent standard of living.
- Additionally, the Minimum Wages Act of 1948 empowers both the Central and State governments to set and revise minimum wages in different sectors of the economy.
