The struggle over defining the minimum wage

In the constant, day to day struggle between capital and labour, the capitalist class tries to increase the degree of exploitation of workers and thus increase the surplus value extracted from the labour of workers, by depressing the wages of workers and by increasing the length of the working day. The struggle of the working class for a limit on length of the working day and for an increase in wages is aimed at reducing the degree of its exploitation.

The struggle of the working class to force the government to establish the criteria for determining the minimum wage in accordance with the actual needs of a dignified human existence at any particular time, as well as for a continuous revision of the minimum wage according to the consumer price index, is a political struggle that is of significance to the entire working class.

Taking the capitalist economy as a whole, surplus value is extracted from the working class as a whole and transferred into the pockets of the capitalist class. Inflation, particularly the rise in price of essential commodities of mass consumption, leads to a further transfer of wealth from the working class and toiling masses to the capitalist class. The fact that the fruits of this transfer of wealth are unequally divided amongst capitalists of different branches of industry and services is a secondary issue. The primary issue is that as a consequence of inflation, the standard of living of workers and of the vast masses of working people of town and country goes down.

The capitalist class uses a variety of ways to depress the wages of workers. In our country, crores of workers are working in what is called Micro, Small and Medium Enterprises (MSME). According to the Labour Ministry, this Sector employs 59.7 million workers in 26.1 million enterprises covering both industry and services. The categorization of Micro, Small and Medium Enterprises is according to capital invested, and not according to the number of workers employed. It can be estimated that a large section of these workers work in enterprises in which the number of workers is less than the threshold limit specified for coverage under the ID Act or the Factories Act. In practical terms, this means that even while they are formally covered by the minimum wages act, they have no legal way to ensure that they actually get it. The workers in this sector, as also contract and casual workers in large scale enterprises are thus completely at the mercy of the capitalists. They work for long hours, at the lowest possible wages, with no social security. They are not in a position to organize themselves into unions to fight for their wages and working conditions.

The existence of a huge army of unemployed helps the capitalist monopolies, Indian and foreign, to put pressure on the wages and working conditions of workers in all sectors including those in large-scale industries and services, who have formally got some measure of rights from the existing labour laws.

Thus the question of definition of minimum wages is of greatest importance to the entire working class of our country and all working people. It sets a standard for the whole of society, below which no worker or working person should be forced to live in.

The capitalist class and its government are forced to accept that there should be an official Minimum Wage. However, they continuously put forth justifications to keep it at the lowest level possible. The main argument for the capitalist class is provided by the ILO Convention on Fixing Minimum Wages, 1970 (C131). Article 3(b) of this Convention declares, as one of the guiding elements to be taken into account in defining minimum wages in a country as "economic factors, including the requirements of economic development, levels of productivity and the desirability of attaining and maintaining a high level of employment.”

The bourgeoisie uses Article 3 (b) as the guiding principle to justify that the minimum wage should be defined so low that the capitalist class can make maximum profits, arguing that if workers are paid a living wage, along with social security benefits, then it will hurt “economic development” and reduce employment.

This is the biggest lie. In the drive for maximum profits, the capitalist class continuously pushes down the living standards of the working class and people. One of the reasons why the capitalist system has been hurtling from one crisis to another is that it keeps getting caught in the crisis of overproduction. While there are too many goods in the market, the mass of workers and other toiling people are so exploited and impoverished that they do not have the money to buy even the bare necessities of life.

History of Defining Minimum Wages in India

The third and fourth meetings of the Standing Labour Committee held in 1943 and 1944 respectively and successive sessions of the Tripartite Labour Conference in 1943, 1944 and 1945 discussed need for Minimum Wages legislation. On April 11, 1946, a Minimum Wages Bill was introduced in Parliament. It was made an Act in March, 1948.

In November, 1948, the government appointed a Tripartite Committee on Fair Wages.  The Committee consisted of representatives of employers, employees and Government.  Their task was to enquire into and report on the subject of fair wages to labour.

The Committee on Fair Wages defined three different levels of wages viz; (i) Living wage (ii) Fair wage (iii) Minimum Wage.

The statutory Minimum Wage is the wage determined according to the procedure prescribed by the relevant provisions of the Minimum Wages Act, 1948 and is applicable to those employments which are listed in the Schedules of the Act. 

Both Central and State governments have created their own schedules. By creating these Schedules, the capitalist class and its governments have kept out large sections of workers from the purview of the act. The working class is therefore demanding that the Minimum Wages Act must be applicable to all workers without exception.

The next landmark in Minimum wages legislation was the 15th Session of the Indian Labour Conference held at New Delhi in July 1957. An important resolution was passed, which laid down that the minimum wage should be need-based and should ensure the minimum human needs of the industrial worker. 

The 15th Session of the Indian Labour Conference was held at a time when bourgeoisie and the Congress Party was promoting the “socialistic pattern of society” while the Communist Party of India was enjoying the support of the militant sections of the working class and peasantry. This was the time when the Communist Party fell prey to the illusion that socialism could be achieved peacefully by parliamentary means without a social revolution and began propagating the line of "non-capitalist" path of development.

The Resolution of the 15th Session of the ILC on Minimum wages have remained unimplemented till now, even after 56 years. Capitalism has developed by leaps and bounds in our country in this period. The requirements of a worker and his or her family have changed in accordance with the development of society. The Minimum Wage, as defined by 15th ILC 56 years ago, will not enable a modern worker to ensure his or her human needs. In fact, the Minimum Wage today is far below even what the calculations on the basis of the 15th ILC resolution would lead to.

The attitude of the bourgeoisie and its governments to workers when they demand a Minimum Wage according to the recommendations of the 15th ILC is best revealed by the comments of Delhi Chief Minister Shiela Dikshit to a delegation of trade unions representing the Delhi Mazdoor Ekta Committee. When the trade union leaders put forth a demand of Rs 15,000 as minimum wages based on 15th ILC recommendations, Mrs Dikshit said that "workers don’t eat meat or eggs, and workers live in jhuggis, so they cannot demand housing costs calculated as per the governments' low cost housing schemes"!

In 1991, the Supreme Court in its judgment expressed the view that  children’s education, medical requirement, minimum recreation, including festivals and ceremonies, provision for old age and marriage should further constitute 25 per cent and be used as a guide for fixing the minimum wage. This judgement too is openly violated by the governments in fixing the minimum wage.

With the launch of the liberalisation and privatisation program, the bourgeoisie and its governments have ruthlessly intensified the attacks on the livelihood and rights of the working class and people. They have talked about tendency to fix “minimum wages at unrealistically high levels” (30th ILC, 1992). The definition of the minimum wage has not been revised, taking into account the development and changes in society and the workforce. Systematically, the standard of living of workers has been under attack.

In this period, the government has floated the concept of “National Floor Level Minimum Wages”, which is defined as the absolute minimum wage acceptable in any enterprise in any part of the country. This is a concept to further lower the standard of living of the working class. It has been advanced in the name of having a minimum standard in all states. The “National Floor Level Minimum Wage” as of today is what is paid to MNREGA workers. In the 45th ILC in June 2013, the Prime Minister talked of amending the Minimum Wages Act to put in place “National Floor Level Minimum Wage”. The aim of this is to divert the attention of the working class from the demand for a fresh definition of what should be the minimum wage.

Conclusion

The struggle between the working class and working people on the one hand, and the bourgeoisie and its government on the other, over the definition of the minimum wage and what its value should be, is an extremely important political struggle of the working class.

The working class needs to establish what constitutes a human existence in today’s conditions. It must include nutritious food, including milk, meat, eggs, cooking oil, sugar, pulses and vegetables. This cannot be reduced to 2700 calories worth of wheat or rice. The working class cannot accept that it has to live in unhygienic overcrowded slums, without toilets or drinking water, while the capitalists of our country move on to join the ranks of the richest of the world. We cannot accept being deprived of quality education and health care or social security against accidents, ill health and old age. As the producers of the wealth of this country, it is we, alongside of the peasantry, who must have the first claim on the national wealth. We cannot accept that our rights are sacrificed at the altar of guaranteeing maximum profits for the monopoly capitalists and the financial oligarchy.

Living wage, fair wage and minimum wage              

The living wage, according to the Committee, represented the highest level of the wage which should enable the worker to provide for himself and his family not merely the basic essentials of food, clothing and shelter but a measure of frugal comfort including education for children, protection against ill health, requirements of essential social needs and a measure of insurance against more important misfortunes including old age. But the Committee felt that when such a wage is to be determined, the considerations of national income and the capacity to pay of the industry concerned has to be taken into account and the Committee was of the opinion that living wage had to be the ultimate goal or the target.

That is, ensuring state guarantee of such a wage was relegated to a policy objective, something the working class and people should hope that the government would ensure, with no practical measures or timeline to ensure the same. That this has remained a policy objective is revealed by the fact that 66 years after independence, the vast majority of our people in town and countryside live a life of abysmal poverty. Vast sections of our working class are deprived of even the basic essentials of food and shelter, let alone education and health care of their families.

The Fair Wages Committee in this connection observed:”the objective is not merely to determine wages which are fair in the abstract, but to see that employment at existing levels is not only maintained, but if possible, increased.  From this point of view, it will be clear that the levels of the wages should enable the industry to maintain production with efficiency.  The capacity of industry to pay should, therefore, be assessed by the Wage Boards in the light of this very important consideration.” Thus the Committee put primacy on the “capacity of industry to pay”, i.e. the interest of the capitalist class of ensuring maximum profits was not hurt in defining Fair Wages.

The Fair Wages Committee recommended that the fair wage should be related with the productivity of labour. With regard to the machinery to be adopted for the fixation of fair wages, the Committee favoured the setting up of Wage Boards. It recommended that there should be a State Board for each State, composed of independent members and representatives of employers and employees in equal numbers. In addition to the State Board, there should be a Regional Board for each industry taken up for wage regulation. 

The Fair Wage Committee drew a distinction between a minimum and a living wage. With regard to the fair wage, the Committee recommended that it should be above the minimum wage and below the living wage. 

The “Fair Wages” are what are worked out through the tripartite wage boards consisting of representatives of the government, capitalists, and the unions in the organised large scale sector of the economy, wherever such tripartite Wage Boards have been constituted.

The Committee was of the view that a minimum wage must provide not “merely for the bare sustenance of life, but for the preservation of the efficiency of the worker”. For this purpose the minimum wage must also provide for some measure of education, medical requirements and amenities.

 

Definition of minimum wage: 15th ILC

The following norms were accepted as a guide for all wage- fixing authorities including Minimum Wage Committees, Wage Boards, Adjudicators, etc.:

  1. 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 adolescents being disregarded.  (family was considered as man, wife, and two children)
  2. Minimum food requirements should be calculated on the basis of a net intake of 2700 calories per day, as recommended by Dr. Akroyd for an average Indian adult of moderate activity. 
  3. Clothing requirements should be estimated on the basis of 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. 
  4. 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 ; and
  5. Fuel, lighting and other miscellaneous items of expenditure should   constitute 20 per cent of the total minimum wage.

The Resolution further laid down that wherever the minimum wage fixed was below the norms recommended above, it would be incumbent on the authorities concerned to justify the circumstances which prevented them from adherence to the aforesaid norms. This has allowed the government to fix the minimum wage below even the above stated norm using various excuses.

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Mimimum Wages    Jul 16-31 2013    Political-Economy    Rights     Popular Movements     Economy    

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