Tag Archives: Labour

Minimum Wages Policy in Karnataka

AN ANALYSIS OF KARNATAKA’S MINIMUM WAGES POLICY: HOW THEY ARE NOTIFIED, CONTESTED AND UPHELD

 

-SMITA MUTT

 

Various Theories for the determination of wages

 

The procedure of setting minimum wages in India is a balance between legislative statute and policy regulation, the understanding of which requires vigilance and careful study from the lawyers, academics, activists and union leaders who are actively engaged in contemporary labour questions. These wages build a paradoxical economic issue – while the interests of workers and their unions seem antithetically opposed to those of their managers and company owners, they are actually more closely intertwined. To appreciate the current situation, one must follow two trends: tracing the history of the minimum wage as a political and judicial issue and understanding the statutory procedure by which administrative notifications are prepared. But it is also necessary to lay focus on the fact that it is through institutions such as courts, labour departments and civil society groups that the beneficiaries of minimum wage policy are served amidst corruption or administrative negligence.

History of the Minimum Wage Policy

In any discussion of the legislative and policy implications of the minimum wage in India, 1948 is a crucial year. It involved the passage of the Minimum Wages Act and the appointment of the Tripartite Committee on Fair Wages, which drew distinctions between three conceptual levels of wages – the living wage, the fair wage and the minimum wage. Of these, the first is arrived at on the basis of meeting basic needs, the second is calculated with regards to the industry’s ‘Capacity to Pay’ and the third is the statutory mandate.

As these dimensions were laid out and efforts were made to navigate the tensions between them, the 15th Annual Labour conference was held in 1957. In this conference, it was argued that minimum wage should be fixed in a scientific and needs-based manner – an idea that became hugely influential within the minimum wage discourse. They recommended that the minimum wage should sustain a family (estimated at three consumption units – one man, one woman and two children) for their requirements of food, clothing, rent, fuel and miscellaneous expenses.

The events discussed so far are negotiating processes, where administrative and political actors gathered to establish a legal infrastructure for minimum wages. However, their policy recommendations were not easily accepted by industries, which challenged them through an array of cases:

  • Bijay Cotton Mills Ltd vs. State of Ajmer, 1954

This petition was filed by the Mill owners challenging the right for the “appropriate government” to mandate a minimum wage, citing the Fundamental Right to freedom of trade or business (Art. 19(1)(g) and was dismissed.

  • Crown Aluminium vs their Workmen, 1957

Crown Aluminium Works was dissatisfied with the verdict of an Industrial Tribunal set up to adjudicate a dispute between them and their workmen. After a wage was agreed upon, Crown filed an appeal and then this petition, arguing that certain “economy measures” had to be taken. Since the revision of the fixed wage structure was due to the employer’s financial difficulties, both filings were dismissed, recasting minimum wage as the market price of the factor. Industries could either hire workers at the wage or not at all.

  • U. Unichoy and Others vs. State of Kerala, 1961

A group of tile factory owners in Kerala argued that the minimum wage notification actually denoted a fair wage and was arrived at in an unfair (and non-procedural) manner. After examining the case, the court rejected their petition, showing that the wage was properly fixed through the procedure established by the Act.

In each of these cases, the legal institution of minimum wage and the established statutory process of notifying it were protected. However, in recent years, we have seen more successful challenges, both due to a dysfunction within the State Labour Departments and a shift towards more flexible labour regulations.

Procedure to Notify Minimum Wages and Contemporary Challenges

It is worth noting that since Minimum Wage is a labour issue that appears on the Concurrent List, it is the States that set the notifications according to areas of employment enumerated in the Central law’s Schedule. States are hesitant to revise minimum wages too high, fearing that employers will move to other states with more favourable wage regimes. This stress is only more acute for exporters, who put pressure on the State Labour Departments to loosen restrictions.

After considering all advice and representations, the Government must notify the new minimum wage by scheduled area of employment. Under the Article 3(1)b, wages must be reviewed and if necessary, revised every 5 years – a practice that most states do not keep up with.

Minimum Wage

In October 2015, the High Court rejected Karnataka Labour Department’s Minimum Wage notification for automobile and foundry workers, citing “glaring lapses and gross dereliction of duty.” Going on to attack public servants for their “carelessness and negligence”, the Court ordered an enquiry into the Department and for all those responsible for incurring penalties. After months of delays, when the case finally came before the court, the Labour Department could not show that their decision was based on recommendations from the Advisory Board, a major procedural lapse that forced Justice Venugopala Gowda to accept the petitions and quash the wage notifications. Lawyer-activists such as Clifton d’Rosario of Manthan Law Chambers, who routinely deal with the Labour Department maintained that this lacklustre work is its general culture. The Court additionally ordered the Government to issue proper notifications by the end of November and directed companies to pay 75 percent of the higher wages in the interim.

This push-and-pull of institutions that fight against and also for, set minimum wages is seen not just in Karnataka, but in other states with developed industries such as Tamil Nadu, Maharashtra and West Bengal. These occurrences are due to successful interactions of social justice actors, but it is just as important to remember that the minimum wage is a limited policy. It fails to cover workers in the unorganised sector as well as any sector not included in a particular State’s Schedule. Moreover, non-compliance of employers tends to increase due to intersectional identities of the workers – young, unmarried, lower caste women employed in the garment sector are some of the greatest victims of partially implemented minimum wage policies.

(Smita is pursuing Master’s Programme in Public Policy at the National Law School of India University. She can be reached at smitamutt@nls.ac.in)

References

Eastern Book Company. 2016. Minimum Wages Act, 1948 [Act 11 of 1948]. 28th . Lucknow: EBC Publishing (P) Ltd.

Express News Service. 2016. “Revise auto, foundry workers’ wages by November 30: Karnataka HC to the government.” The New Indian Express Online. October 29. Accessed December 2016. http://www.newindianexpress.com/cities/bengaluru/2016/oct/29/revise-auto-foundry-workers-wages-by-november-30–karnataka-hc-to-government-1532986.html.

Sampath, G. 2016. “Do we need a minimum wage law?” The Hindu Online. September 1. Accessed December 7, 2016. http://www.thehindu.com/opinion/op-ed/Do-we-need-a-minimum-wage-law/article14616002.ece.

Supreme Court of India. 1954. “THE EDWARD MILLS CO. LTD., BEAWAR, AND OTHERS Vs. THE STATE OF AJMER AND ANOTHER.” Judgment Information System (JUDIS). Accessed December 2016. http://judis.nic.in/supremecourt/imgs1.aspx?filename=889.

Featured images source

http://thinkhrm.blogspot.in/2015/10/minimum-wages-revised-in-haryana-wef-01.html

http://zeenews.india.com/tags/minimum-wages.html

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From Haymarket Square to Hosur Road: State of workers in India in 3 charts

Sachin Tiwari

The revolution never came. Battles of workers’ rights were won but the war often lost across the world. This is what unites the Haymarket Affair of 1886 with the garment workers’ protest on Hosur Road in Bengaluru a fortnight back. From 1886 to 2016, the world has tried every conceivable arrangement of the economic system, yet workers have never seemed to have found a way out of the daily insecurities of their wages and livelihoods.

Today, as countries across the world celebrate International Labour Day, it presents an occasion to look back at labour welfare over the century. The paradox is that the concerns of the workers don’t appear to have changed from the Haymarket incident to India’s Hosur Road protests in Bengaluru. Some may be quick to point out that Haymarket was about an 8 hour work day and Bengaluru protest was workers protesting against an arbitrary and sudden change in Employees’ Provident Fund rules pertaining to withdrawal of funds by the workers.  However, at a broader level, the nature arguably remains the same – the arbitrariness exercised by employers in dealing with workers, work conditions, wages and matters which are related to their livelihood. The sense of insecurity among the workers remains high, as seen in the extremely short time that it took from the notification of changed rules to the demonstration that happened across the garment industries clusters in Bengaluru.

Lenin’s sense of confidence in his 1919 May Day speech and the international optimism with the formation of International Labour Organization (ILO) in the same year was remarkable.  The Russian daily Izvestia reported a part of Lenin’s speech two days later:

Pointing to the children, Lenin said that they, who were taking part in the celebration of the festival of the emancipation of labour, would fully enjoy the fruits of the labours and sacrifices of the revolutionaries.

Our grandchildren will examine the documents and other relics of the epoch of the capitalist system with amazement. It will be difficult for them to picture to themselves how the trade in articles of primary necessity could remain in private hands, how factories could belong to individuals, how some men could exploit others, how it was possible for those who did not work to exist. Up to now the story of what our children would see in the future has sounded like a fairy-tale; but today, comrades, you clearly see that the edifice of socialist society, of which we have laid the foundations, is not a utopia. Our children will build this edifice with oven greater zeal.” (Stormy applause)

The world moved on quickly from that moment in history. The capitalist system contrary to Lenin’s dream is not a relic but the order of the day. Factories have increasingly gone on to belong to individuals. Free market economics soon took over pounding the socialist dream to fine dust.

Back home, India of 2016 too has ventured far away from the socialist dream of some of its leaders. Prime Minister Narendra Modi prefers to mark this day in 140 characters on twitter with this message –

“On Labour Day we salute the hard work, determination & dedication of millions of Shramiks who have an invaluable role in the making of India” (sic)

The point of this post is to illustrate that the developments related to workers’ rights and welfare should be a cause of concern to policy makers. The workers continue to contribute to the making of India but they certainly need more attention and care than what can be expressed in 140 characters.

The first chart (Chart 1) indicates a quiet and unseen quelling of workers’ right to collective action. In a nine-year period from 2000 to 2009 the number of registered trade unions has halved. Labour movements thrive on collective action. It is not a hard guess to figure the bargaining power that the workers might be left with in the wake of a declining number of registered unions across the country.

sachin - chart1

Chart 1: Chart was developed from MOSPI data available on data.gov.in

 

The next major trend was affirmed formally by the National Commission for Enterprises in the Unorganised Sector under Arjun Sengupta’s lead (the Commission’s report was long withheld by GoI for reasons best known to the corridors of Vyapar Bhavan). The report as indicated –

 “…is focused on the informal or the unorganised economy which accounts for an overwhelming proportion of the poor and vulnerable population in an otherwise shining India. It concentrates on a detailed analysis of the conditions of work and lives of the unorganised workers consisting of about 92 percent of the total workforce of about 457 million (as of 2004-05). For most of them, conditions of work are utterly deplorable and livelihood options extremely few. Such a sordid picture coexists uneasily with a shining India that has successfully confronted the challenge of globalisation powered by increasing economic competition both within the country and across the world…

Further, it found that –

At the end of 2004-05, about 836 million or 77 percent of the population were living below Rs. 20 a day and constituted most of India’s informal economy.

Understandably, this was a damning report to come out in 2007 and most certainly was kept away from public attention. Chart 2 compares the formal and informal sector employment in organised and unorganised sectors.

 

sachin - chart2
Chart 2: The chart was developed from datasets available on data.gov.in 

 

Finally, let us examine the central spending on social security across various categories of expenditure of GoI. This is to illustrate the state of neglect and dereliction of the state from its professed commitment to workers’ welfare.

sachin - chart3

Chart 3: This data was first presented by Ravi Duggal at Medico Friends Circle meeting in Hyderabad, 2013. The figures are extracted from Ministry of Finance's annual publication Indian Public Finance Statistics - 2012-2013

 

Labour welfare as observed from the chart, forms least of the priority compared to pension and retirement benefits for civil servants. The priorities of GoI, if not stated, can sure be observed from these patterns of spending. In the Indian government’s imagination it isn’t the workers but civil servants who have an invaluable role in the making of India. Perhaps!

Bottomline

For all the optimistic, enthusiasm laden lectures that labour rights lawyers and professors make in the country’s many universities, the real picture isn’t a happy one. Neither is it a narrative of winning the rights cause. If any, it is a losing battle and thinkers, professors and lawyers must necessarily move beyond the glory song of rights won. The direction to move in is to think of how must the workers be armed (not in the weapons sense) to take on this shove from the current economic system which appears to be shortchanging them left, right and center.

 

(Sachin Tiwari is a graduate student of Master of Public Policy in the National Law School of India University. He can be reached at sachin.t@nls.ac.in)

Sources

V. I. Lenin Internet Archive (www.marx.org), 2002

Narendra Modi Twitter post (https://twitter.com/narendramodi/status/726604459778936832)

Report of the Committee on Unorganised Sector Statistics (https://ruralindiaonline.org/resources/report-on-conditions-of-work-and-promotion-of-livelihoods-in-the-unorganised-sector/)

 

 

 

Featured image source: http://blogs.ft.com/beyond-brics/files/2012/02/Indian-construction-workers.jpg