The concept of minimum wages arose from the conditions created by the payment of low and sweating wages, both in the organized and un-organized sector of the industry, and the consequent need for protecting the workers from such exploitation. As far back as 1921, a resolution recommending establishment of industrial boards for the determination of minimum wages for each industry in Bengal, was debated in the Bengal Legislative Council. Since then, the movement for fixing minimum wages by legislation gained further impetus from the development of the trade union movement and the agitation of the workers and their unions for adequate wages. However it was only in 1948 that the Minimum Wages Act was passed and enforced.
The Minimum Wages Act, 1948 was enacted to safeguard the interests of workers, mostly in the unorganized sector by providing for the fixation of minimum wages in certain specified employments. It binds the employers to pay their workers the minimum wages fixed under the Act from time to time. The Act covers all employees who are engaged to do any work, skilled or unskilled, manual or clerical, in the mine.
Under the Act, both the Central Government and the State Governments are the appropriate Governments to fix, revise, review and enforce the payment of minimum wages to workers in respect of ‘scheduled employments’ under their respective jurisdictions. There are 45 scheduled employments in the Central sphere and as many as 1530 in State sphere.
In the Central sphere, the Act is enforced through the Central Industrial Relations Machinery (CIRM). CIRM is an attached office of the Ministry of Labour and is also known as the Chief Labour Commissioner (Central) [CLC(C)] Organisation. The CIRM is headed by the Chief Labour Commissioner (Central). While, the State Industrial Relations Machinery ensures the enforcement of the Act at the State level.
The appropriate Government is required to appoint an Advisory Board for advising it, generally in the matter of fixing and revising minimum rates of wages. The Central Government appoints a Central Advisory Board for the purpose of advising the Central and State Governments in the matters of the fixation and revision of minimum rates of wages as well as for coordinating the work of Advisory Boards.
Minimum wage and an allowance linked to the cost of living index and are to be paid in cash, though payment of wages fully in kind or partly in kind may be allowed in certain cases. The minimum rate of wages consists of a basic wage and a special allowance, known as ‘Variable Dearness Allowance (VDA)’ linked to the Consumer Price Index Number. The allowance is revised twice a year, once in April and then in October.
Under the Minimum Wages Act, there are two methods for fixation/revision of minimum wages, namely:-
- Committee method – Under this method, committees and sub-committees are set up by the appropriate Governments to hold enquiries and make recommendations with regard to fixation and revision of minimum wages, as the case may be.
- Notification method – Under this method, Government proposals are published in the Official Gazette for information of the persons likely to be affected thereby and specify a date not less than two months from the date of the notification on which the proposals will be taken into consideration.
After considering the advice of the Committees/Sub-committees and all the representations received by the specified date in Notification method, the appropriate Government shall, by notification in the Official Gazette, fix/revise the minimum wage in respect of the concerned scheduled employment and it shall come into force on expiry of three months from the date of its issue. The Government may review the minimum rates of wages and revise the minimum rates at intervals not exceeding five years.
The fixation of minimum wages depends on a number of factors such as level of income and paying capacity, prices of essential commodities, productivity, local conditions, etc. Since these factors vary from State to State, the wages accordingly differ throughout the country. Hence, in the absence of a uniform national minimum wage, the Central Government introduced a ‘national floor level minimum wage’. Initially, this minimum wage level was fixed at Rs.35/- per day and has been revised periodically. The last revision being Rs.66/- per day with effect from 1.2.2004, on the recommendations of the Central Advisory Board. All the States/UTs Governments are required to ensure that fixation/revision of minimum rates of wages in all the scheduled employments is not below this national minimum wage.
Also, in order to bring uniformity in the minimum wages of scheduled employments, the Union Government has requested the States to form regional Committees. Hence, five Regional Minimum Wages Advisory Committees have been formed in the country. These include:-
|Eastern Region||West Bengal, Orissa, Bihar, Jharkhand and Andaman & Nicobar Islands.|
|North Eastern Region||Arunachal Pradesh , Assam, Manipur, Meghalaya, Mizoram, Sikkim, Nagaland and Tripura.|
|Southern Region||Andhra Pradesh, Karnataka, Kerala, Tamil Nadu, Pondicherry and Lakshadwadeep.|
|Northern Region||Punjab, Rajasthan, Himachal Pradesh, Jammu & Kashmir, Haryana, Uttar Pradesh, Uttarakhand, Delhi and Chandigarh.|
|Western Region||Maharashtra, Gujarat, Goa, Madhya Pradesh, Chhattisgarh, Dadra & Nagar Haveli and Daman & Diu.|