ANNEXURE

Jalaj Jain, Angela Dua

1. Name of Legislation/Policy: Minimum Wages Act, 1948
2. Provisions requiring change along with rationale:
“3. Fixing of minimum rates of wages.
(1) The appropriate Government shall, in the manner hereinafter
provided,--
(a) fix the minimum rates of wages payable to employees employed
in an employment specified specified in Part I or Part II of the
Schedule and in an employment added to either Part by notification
under section 27:
Provided that the appropriate Government may, in respect of
employees employed in an employment specified in Part II of the
Schedule, instead of fixing minimum rates of wages under this
clause for the whole State, fix such rates for a part of the State or
for any specified class or classes of such employment in the whole
State or part thereof;]
(b) review at such intervals as it may think fit, such intervals not
exceeding five years, the minimum rates of wages so fixed and
revise the minimum rates, if necessary.”

5. Procedure for fixing and revising minimum wages.

(2) After considering the advice of the committee or committees
appointed under clause (a) of sub-section (1), or as the case may
be, all representations received by it before the date 'Specified in
the notification under clause (b) of that sub-section, the
appropriate Government shall, by notification in the Official
Gazette, fix, or, as the case may be, revise the minimum rates of
wages in respect of each schedule employment, and unless such
notification otherwise provides, it shall come into force on the
expiry of three months from the date of its issue.”
 Rationale: The provision provides power to the state governments
to determine the minimum wages of the labour employed in the
paper and pulp industry, which leads to determination of unequal
wages in different regions. Hence, certain regions/states have a
completive advantage over the others. This differentiation and
categorization is an entry and operational barrier for the market
players in pulp and paper industry.
The following table depicts the disparity in minimum wages across
the nine most important states with respect to paper and pulp
industry (Subject to time and Living Index Number):

S. State Unskilled Semi Skilled Highly

No. (Rs) Skilled(Rs (Rs) Skilled
) (Rs)
Zon Zon Zon Zon Zon Zon Zon Zon
e1 e2 e1 e2 e1 e2 e1 e2
1. Andhra 7381 6796 7984 7359 8412 7694 9572 8652
Pradesh
(per
month)
2. Gujarat 276 268 284 276 293 284 -
(per day)
3. Himacha 250 258.47 294.17 354.5
l Pradesh
(per day)
4. Jammu & 225 - 350 400
Kashmir
(per day)
5. Karnatak 185 170 190 180 205 195 225 205
a
(per day)
6. Maharas 5100 4900 5600 5400 6100 5900 -
htra
(per
month)
7. Odisha 200 220 240 260
(per day)
8. Tamil 5890 6044 6450 6806
Nadu
(per
month)
9. West 7489 6774 8238 7450 9062 8195 -
Bengal
(per
month)

3. Suggested Change in provisions identified:

(a) Essential: The provision must be amended to set up an
interstate committee which will take only the cost of living in
consideration and shall recommend all the states to set wages at
par.
(b) General: By way of the table mentioned above, lower
minimum wages give a competitive advantage to certain states.
For example, setting up a paper manufacturing factory in
Karnataka will be much cheaper labour wise than West Bengal.
Hence, market players in Karnataka have a competitive
advantage. Hence, the said provisions are not market friendly
and promote unfair competition.

4. Do the modifications, if accepted, come in the way of

achieving objectives of the Legislation/Policy? (please
elaborate)
The legislative intent of the said legislation is to safeguard the
interests of the workers engaged in the unorganized sector, and for
that purpose empowers the appropriate Government to take steps
to prescribe minimum rates of wages in the scheduled industries.
The labour market is imperfectly competitive. The modifications
suggested are in line with this objective, and seek to set similar
wages for similar industries across the country, so as to prevent
 any exploitation of workers at the hands of the manufacturing
industries and reducing the chances of unfair competition between
the states on account of different minimum wages.

5. Is there any countervailing factor that could possibly justify

continuing with the existing provision(s)?
The existing provisions of the Act give different states governments
the power to set minimum wages for their states because every
state has different living and market conditions that need to be
taken into consideration for setting the wages. Hence, State
governments are best fit to determine that minimum wage.
Further, the Code on Wages Act, 2019 has already been passed by
the Parliament, which envisages a single minimum wage for the
entire country, thus removing the disparity between the states and
their workers.
Moreover, in all studies on pulp and paper industry, the major
challenges faced by the players are the costs of raw materials and
its procurement. Wages are costs that every industry is meant to
bear.