Fair wages

In December 1947 there was an Industries Conference with representatives of the Government of India and the Governments of the States, businessmen, industrialists and labour leaders. An Industrial Truce Resolution was passed unanimously which stated inter alia that increase in production was not possible unless there was just remuneration to capital (fair return), just remuneration to labour (fair wages) and fair prices for the consumer. The Resolution was accepted by the Central Government. In 1947 a Central Advisory Council was appointed which in its turn set up a Committee to deliberate and report on fair wages for workmen. The Report of (hat Committee has been cited over and over again. In the Standard Vacuum Refg. Co. v. Its Workmen[1961] 1L.L.J. 227, this Court elaborately analysed the concept of wages as stated by the Committee. The Committee divided wages into three kinds: Living wage, fair wage and minimum wage. Minimum wage, as the name itself implies represents the level below which wage cannot be allowed to drop. It was universally recognised that a minimum wage must be prescribed to prevent the evil of sweating and for the benefit of workmen who were not in a position to bargain with their employers. This received immediate attention in India, though there was an International Convention as far back as 1928 and the demand for fixation of minimum wages extended even to non-sweated industries. The result was the Minimum Wages Act of 1948. The Fair Wages Committee understood the term minimum wage as the lowest wage in the scale below which the efficiency of the worker was likely to be impaired. It was described as the “wage tloor” allowing living at a standard considered socially, medically and ethically to be the acceptable minimum. Fair wages by comparison were more generous and represented a wage which lay between the minimum wage and the living wage. The United Provinces Labour Enquiry Committee classified the levels or living as :

(i) Poverty level,

(ii) minimum subsistence level;

(iii) subsistence plus level, and

(iv) comfort level.

The concept of fair wages involves a rate sufficiently high to enable the worker to provide “a standard family with food, shelter, clothing, medical care and family education of children appropriate to his status in life but not at a rate exceeding the wage earning capacity of the class of establishment concerned.” A fair wage thus is related to a fair workload and the earning capacity. The living wage concept is one or more steps higher than fair wage. It is customary to quote Mr. Justice Higgins o! Australia who defined it as one appropriate for “the normal needs of average employee, regarded as a human being living in a civilized community.” He explained himself by saying that the living wage must provide not merely for absolute essentials such as food, shelter and clothing but for “a condition of frugal comfort estimated by current human standards” including “provision for evil days etc. with due regard for the special skill of the workman”. It has now been generally accepted that living wage means that every male earner should be able to provide for his family not only the essentials but a fair measure of frugal comfort and an ability to provide for old age or evil days. Fair wage lies between the concept of minimum wage and the concept of living wage.

 During the years wage determination has been done on industry-cum- region-basis and by comparing, where possible, the wage scales prevailing in other comparable concerns. The Constitution by Article 43 laid down a directive principle :

“The State shall endeavour to secure, by suitable legislation or economic organization or in any other way, to all workers, agricultural, industrial or otherwise, work, a living wage, conditions of word ensuring a decent standard of life and full enjoyment of leisure and social and cultural opportunity…”

It may thus be taken that our political aim is ‘living wage’ though in actual practice living wage has been an ideal which has eluded our efforts like an ever-receding horizon and will so remain for some time to come. Our general wage structure has at best reached the lower levels of fair wage though some employers are paying much higher wages than the general average.

In July 1957 the Fifteenth Indian Labour Conference met as a tripartite conference and one of the resolutions adopted was :

“The recommendations of the committee as adopted with certain modifications, are given below :-

(1) . . . .

(2) With regard to the minimum wage fixation it was agreed that the minimum wage was ‘need-based’ and should ensure the minimum human needs of the industrial worker, irrespective of any other considerations. To calculate the minimum wage, the committee accepted the following norms and recommended that they should guide all wage fixing authorities, including minimum wage committees, wage boards, adjudicators, etc;

(i) In calculating the minimum wage, the standard working class family should be taken to consist of 3 consumption units for one earner; the earnings of women, children and adolescents should be disregarded.

(ii) Minimum food requirements should be calculated on the basis of a net intake of 2,700 calories, as recommended by Dr. Aykryod for an average Indian adult of moderate activity.

(iii) Clothing requirements should be estimated at a per capita consumption of 18 yards per annum which would give for the average worker’s family of four, a total of 72 yards.

(iv) In respect of housing, the norm should be the minimum rent charged by Government in any area for houses provided under the Subsidised Industrial Housing Scheme for low income groups.

(v) Fuel, lighting and other ‘miscellaneous’ items of expenditure should constitute 20 per cent of the total minimum wage.

(3) While agreeing to these guide lines for fixation of the minimum wage for industrial workers throughout the country, the committee recognized the existence of instances where difficulties might be experienced in implementing these recommendations. Wherever the minimum wage fixed went below the recommendations, it would be incumbent on the authorities concerned to justify the circumstances which prevented them from the adherence to the norms laid down.

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The Association and the Union desire that the wage-floor should be the need-based minimum determined at the tripartite conference in the above resolution and that the emoluments of the middle class staff should be determined with a proper coefficient. They suggest a coefficient of 120 per cent in place of the 80 per cent applied by the national tribunal, to determine the wages of the middle class staff in relation to the wages of the working classes. In support of their case the employees first point to the directive principle above-quoted and add that the First Five Year Plan envisaged the restoration of “pre- war real wage as a first-step towards the living wages” through rationalization and modernization and recommended that “the claims of labour should be dealt with liberally in proportion to the distance which the wages of different categories of workers have to cover before attaining the living wage standard.” The employees next refer to the Second Five Years Plan where it is stated :

“21. Wages

A wage policy which aims at a structure with rising real wages requires to be evolved. Worker’s right to a fair wage has been recognized but in practice it has been found difficult to quantify it. In spite of their best efforts. industrial tribunals have been unable to evolve a consistent formula…”. (p. 578 para. 21).

39. The establishment of wage boards, the taking of a wage census and the improvement of marginal industries which operate as a ‘drag’ on better industries was suggested in that plan. Finally, it is submitted that the Third Five Year Plan has summed up the position thus; in paras 20 and 21 at p. 256 :

“20. “The Government has assumed responsibility for securing a minimum wage for certain sections of workers, in industry and agriculture, who are commercially weak and stand in need of protection. Towards this end the Minimum Wages Act provides for the fixation and revision of wage rates in these occupations. These measures have not proved effective in many cases. For better implementation of the law, the machinery for inspection has to be strengthened…”.

“21. Some broad principles of wage determination have been laid down in the report of the Fair Wages Committee. On the basis of agreement between the parties, the Indian Labour Conference had Indicated the content of the need-based minimum wage for guidance in the settlement of wage disputes. this has been reviewed and it has been agreed that the nutritional requirements of a working class family may be reexamined in the light of the most authoritative scientific data on the subject…”.

Source: ALL INDIA RESERVE BANK EMPLOYEES ASSOCIATION  Vs. RESERVE BANK OF INDIA[(1966) AIR(SC) 305 ]