Recognition of Unorganized Sector under Minimum Wages Act
Submitted by: Mr. Ramsai Charan Kondala Sem: V Roll no. 201255
Damodaram Sanjivayya National Law University
Contents INTRODUCTION ......................................................................................................................................... 2 CONSTITUTIONAL STATUS OF MINIMUM WAGES ACT, 1948.AND INTERVENTION OF OTHER LABOUR LEGISLATIONS INTO THE WAGE LEVEL AND STRUCTURE OF WAGES. .................. ........................... ................... ................... ................. ........ 4 ANALYSIS ON WAGE POLICY ..................................................................................................................... 6 NORMS OF WAGING POLICY ..................................................................................................................... 7 IMPLEMENTATION OR ENFORCEMENT OF THE ACT ................................................................................ 8 CONCLUSION ............................................................................................................................................. 9
INTRODUCTION
The minimum wages in our country is given to the workers, under minimum wages act, 1948. This act protects interests of the workers and protects them from exploitation from the employers and capitalists.There need of the hour to increase the basic rates of minimum wages and there is necessity to change the view and approach on this issue. The present minimum wage system which is extracted from minimum wage legislation in India instead of eradicating the poverty, it is in fact increasing increasing it Initiatives Initiatives by strengthening
effective enforcement of machinery,
simplifying the system which is related to coverage and revisions of minimum wage rate, relating the rates with the Consumer Price Index Numbers (CPI), and various workers increase the involvement in organizations for the implementation of the Minimum Wages Act, There is a huge debate between the union leaders of our nation regarding its effectiveness of protecting interests of workers, of all proportions by this piece of labor legislation. Even though there are periodic revisions done to this act it was unable un able to protect the unorganized workers. This project will through lame light on issues and concerns relating to unorganized workers who are largely out of minimum wage legislation.
CONSTITUTIONAL STATUS OF MINIMUM WAGES ACT, 1948.AND INTERVENTION OF OTHER LABOUR LEGISLATIONS INTO THE WAGE LEVEL AND STRUCTURE OF WAGES.
The concept of the living wage is mentioned in the directive principles of state policy given in the constitution of India, The minimum wages act was established under article 43 of Indian constitution explains that, "The State shall strive to secure by appropriate legislation or economic/financial organization or in any other way to all employees, industrial, agricultural or otherwise work, a living wage, conditions of work safeguarding a decent standard of life and full 1
pleasure of vacation and social and cultural opportunities."
The term “labor” was “labor” was mentioned under item no., 22 of the concurrent list hence both state and central governments can make labor legislations. Legislations regarding the casual workers and contractors are generally done by the central government through central legislation, all such central legislations will make an influence may be direct or indirect upon the wage level and the structure of wage in the informal sector.(The term “informal sector ” means the sector which is not taxed and not included In GNP unlike the formal economy). Here are some of the central legislations which show direct impact on the wage level and the structure of wages. The Minimum Wages Act, 1948 – This act provides minimum remuniration for work and it provides the minimum wages for workers both in organized and unorganized sector. The Trade Unions Act, 1926 – 1926 – This This act enable workers into small units to form unions, unions give power to bargain wages and conditions of work. The Industrial Disputes Act, 1947 - To enable unions to raise industrial disputes on wages and the conciliation machinery to intervene. The Equal Remunerations Act, 1976 - Assure equal wage to women for same or similar work.
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The Payment of Wages Act, 1936 -To regulate the manner of payment of wages and their realisation in case of non-payment. The Contract Labours(Regulation and Abolition) Act, 1970 - The contractor is required to pay wages and in case of failure on the part of the contractor to pay wages either in part or in full, the 2
Principal Employer is liable to pay the same.
Among the labour legislations minimum wage legislation was a paramount legislation for the benefit of o f unorganized uno rganized workers, as the wages in organized sector are determined by negotiation ne gotiation between the laborers/employees and the employer. Whereas the people p eople in unorganized sector do not have the terms of employment hence there are no proper working hours as the time of work alters from day to day. Theydon‟t have the secured work and more over most of the people who work in the organized sector are illiterates hence there is every chance for the employer to exploit the labour of these workers hence the intervention of the government is necessary through labor legislations like minimum wages act. The objective of the minimum wages act is to ensure that minimum sustenance wage for employees. The act needs that the appropriate government of the country to fix minimum wage rate for the workers of informal sector and to revise and review the minimum wage rates at regular intervals not exceeding 5 years. years .The whole indication of this act is to prevent and protect the laborers from exploitation by the employers without paying the proper wages and preventing the employer to implore his incapability to pay the said wages to his workers. The minimum wage rate can be fixed at :a) Time rate b) Piece rate c) Guaranteed time rate d) Overtime rate.
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The Act provides that different minimum wage rate ma y be fixed for, a) Different scheduled employments, b) Different works in the same employment, c) Adult, adolescent and children, d) Different locations or e) male and female. Also, such minimum wage may be fixed by a) An hour, b) Day, 3
c) Month, or d) Any other period p eriod as may be prescribed by the notified authority.
Government in the year 1988 conducted a meeting of labour ministers and took a key decision, with the genuine motive of protecting the fair minimum wage and maintains the minimum wage level against inflation. They introduced the concept of Variable Dearness Allowance (VDA). The VDA is linked up with consumer price index (CPI) so that VDA changes with changes inCPI whereas CPI Changes accordingly with inflation. VDA is applicable both for the organized and unorganized workers, but VDA which is being decided for the unorganized workers are not satisfactory as they are comparatively low than the VDA provided to workers in organized sector. The revisions and the increase in scale of amount inVDA of unorganized workers are less, compared to the organized workers. The VDA is revised twice a year in the months of April 4
and October .
ANALYSIS ON WAGE POLICY In the present globalized world along with the increasing technology there is increase in the number of basic commodities hence an ideal wage policy should consider the current circumstances of the society along with socio – economic factors, nutrition, agro – climatic conditions, internal factors and things like paying capacity should also be taken into the
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consideration. Inflation takes a unique position in being a factor for construction of wage policy where the other takes a side. Coming to the present scenario the wage policy is getting vague towards the workers of unorganized sector there are multiple factors which are causing this situation the main factor is that the labour legislation is a matter of concurrent list and the state also have power over the legislation because of which there is similar implementation of this legislation throughout the country and the respective state governments are influencing the norms for fixation of wage policy according to their own state policies. The above mentioned important problems and norms that are necessary for the existing wage policy p olicy are elaborated as follows.
NORMS OF WAGING POLICY The objectives of the waging policy and the Minimum wages act are intact but the problem arises with the norms of the act and the policy. The act itself has many loops and flaws. The guide lines th
laid down by the 15 Indian labour conference (ILC) mentions that the minimum wage given to the worker for working eight hours a day should be covering all the basic needs of him and his family(family means his/her(spouse) and two children). Minimum wages not being linked with DA crumbles the real wages of workers due to inflation and drags the workers below the poverty line. Prior to 1990 minimum wages act used to have a clause which says that the wages should be revised for every five years which was a huge gap and there is other clause stating that if there is no such revision done the old wages should continue these clauses lead to negligence for few governments in 1990 the bill was passed amending those clauses asking to revise the wages twice a year (i.e., once in every six months) relating to VDA and CPI. In most of the cases the wages to the labourer depends on the place and the value of the subject/object on which they have to work, for instance a goldsmith was employed to design and make a gold ornament according to the design and similar type of ornament was asked to design with the silver to other smith but the amount which will be paid to the smith will be more compared to the worker who designed the silver. The difference lies on in the skill of the worker/employee but on the subject/object on what they are working. Similarly there are some situations where jobs are same same but the sectors are different to overcome these malfunctions
some of the sates like Andhra Pradesh, Himachal Pradesh etc… categorized the workers into four categories unskilled, semi-skilled, skilled and highly-skilled. This type of classification helps the governments to overcome malfunctions, but there are still inefficiencies even the central labour ministry is not following this categorization. In order to fix minimum wage, the employment schedule should include employment/industrial activity. At present the number of scheduled employments in the Central government is 45 whereas in the case of state government the number is 1232. The criteria for this are that at least 1000 workers should be working in that activity in that particular state. As we know there will be more than half of the percentage get exempted from this mostly people from unorganized sector hence this clearly shows that most of the unorganized workers are out of the purveyance of this wage policy and also from this act.
IMPLEMENTATION OR ENFORCEMENT OF THE ACT The implementation of this act brought significant changes in the field of organized workers but its implementation was left unremarkable for the workers of unorganized sector, as mostly workers in the unorganized sector do not have secure jobs they will be mostly scattered and the employers who employ these unorganized workers are more in number and most of them may be one time employers. In the other case these workers will struggle hard to get the jobs as almost most of them being the daily wage laborers in hunger and need of job accept the job for the wage which is below the minimum wage level or in other cases they fear of losing their job the workers fear to complain on these issues hence all these employers get more vulnerable for exploitation in unorganized sector. The legislation even after being designed for the benefit of these workers the law was unable to cover all these unorganized workers, sometimes it was the inefficiency and laziness of the government which is being reason for poor implementation of minimum wages act in our country. Inefficient enforcement of the Act is the issue in most of the states in India. The issue arises due to lack of awareness among the workers, about minimum wage provisions and their entitlement under the labor legislation. Statistics show that almost 80% of the total workers in an unorganized sector are able to earn 20 rupees per day or even less than half of the government specified rural least wage of 49 rupees per day and urban wage of 67 rupees. This is predominantly factual in remote areas and in places where workers are not united or organized.
Hence the result of their wages have long since failed to keep pace with increasing costs and 5
continue to decrease in real value over time .
CONCLUSION According to intelligences, 422.6 million that means 94% of employees out of the total workforce of 457.5 million people belonging to the unorganized sector in India. These workers donate more than 60% of India‟s gross development products growth. The term „unorganized' is frequently utilized in the Indian perspective to mention the vast numbers of women and men involved in different forms of occupation. These workers are involved in unorganized financial activities in small scale industries, industries, construction, cottage industries, industries, horticulture,
manufacturing
units,
sweeping-cleaning,
rural
textile and garment,
occupations,
forest
based
employments, fisheries, loading-unloading, mining, forestry, agriculture , temporaries, home workers, domestic servants, time rated, casuals, part time workers, own account workers, service sector and contractual workers. Majority of the workermen who are working in the rural areas belong to unorganized sector so there is increase in migrations in rural areas in search of job. The migrants often remain outside the purview of India's collective bargaining strength of the unions and tough labor legislations. Workers who are being engaged in the unorganized sector does not have the profit of quite a few labor legislations such as the Minimum Wages Act or the Factories Act. Social welfare measures such as providential fund, maternity benefits are not given to these un organized workers Instead of revising the wage levels once within in a period the author would suggest to revise the act. The central government should make amendments in the bill such that it regulates all the state governments of the country for its effective implementation there is dare necessity for this act to make changes in it focusing the unorganized workers and stringent laws protecting these unorganized workers from exploiting them. The wage policy is also not adequate and hence the wage policy should also be changed so that the wages given to the workers will be adequate and the wage policy should be made keeping these unorganized workers under purveyance. The government should implement rural employment schemes so that the migrants in the unorganized sector will get reduced so that operation of law will get easier. The people mostly who belong to the unorganized sector are unskilled laborers hence government should provide 5
March 11, 2008, Risinglabour concerns for Indian government, Business Standard.
the skill training to workers of almost all ages so that they can turn unskilled labour into skilled labour and make them a part of organized sector and will help these workers to be self-employed for example government will give free training classes to the people and give them loans with less interest rate so that he can buy a car on hypothecation. Organizations for the unorganized works should be formed so that employment opportunities may increase and chances of exploitation by the employer may also decrease. Government should also think about fixing the wages of the house maids who are generally in houses of two or more people. Hence by this paper the author discussed about minimum wages act in respect with unorganized workers and also discussed about the flaws in the act and summarized by giving the suggestions that are necessary to protect unorganized workers.
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