Minimum Wages Act: Wage Policy In India

A wage bill is an important part of the production cost. For any reason whatever, if the wage bill increases beyond the paying capacity of an employer, the very survival of the firm becomes difficult.
From the employees point of view ‘wages’ determines his standard of living. Wage policy, therefore, it is an important issue and recognising it importance the Constitution of India guaranteed ‘equal pay for equal work’ for both men and women (Article 39) and reiterated that the state must endeavor to secure for all worker’s a living wage and conditions of work which ensure a decent standard of life(Article 43). After Independence, the Government realised that the wages of workers can’t be felt to the fluctuations in labour market conditions. It has decided to fix statutory minimum wages.


Minimum Wages Act:

Minimum wages act is what wage which must invariably be paid whether the company big or small, makes profits or not. It is the bare minimum that a worker can expect to get for services rendered by him. The 15 Indian Labour Conference(1957) formally quantified the term ‘minimum wages’ thus:

  • In calculating the minimum wage, the standard working class family should be taken to comprise three consumption units for one earner, the earnings of women, children and adolescent being disregarded;
  • Minimum food requirements should be calculated on the basis of a set intake of calories as recommended by Dr. Aykroyd for an average Indian adult of moderate activity;
  • Clothing requirements should be estimated on the basis of per capita consumption of 18 yards per annum which would give for the average worker’s family of four a total of 72 yards;
  • In respect of housing, the rent corresponding to the minimum area provided for under government industrial housing scheme should be taken into consideration fixing the minimum wages;
  • Fuel, lighting and other miscellaneous items of expenditure should constitute 20% of the total minimum wage.

Fair Wage:

It is that wage which is above the minimum wage but below the living wage. According to the Committee on Fair Wages, 1948, fair wages should be determined to take the following factors into account:

  • The productivity of labour;
  • The prevailing rates of wages in the same or similar occupation in the same region or neighbouring regions;
  • The level of national income and its distribution;
  • The place of industry in the economy of the country; and
  • The employer’s capacity to pay.

Living Wage:

According to the Committee on Fair Wages, the living wage is the highest among the three. It must provide

  1. Basic needs of life
  2. Efficiency of worker
  3. Satisfying social needs of workers such as medical, education, retirement, etc. ‘Living Wage’ is a dynamic concept, which grows in line with the growth of the national economy.


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