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National Wage Policy and Connected Issues in India
National Wage Policy and Connected Issues in India
PROFILE OF INDIA
Total no: of States and Union Territories Total no: of revenue districts Total population Annual Per capita income GDP Total workforce Organized Unorganized 28 States and 7 Union Territories 602 1028 million (2000) Rs. 10,254 / US $ 520 (for 2000-01) Rs. 18,95,843 crores (for 2000-01 315 million 29.61 million 285.39 million
2,670
Services
Ports Central/State Governments Total Year
3.86
0.022 7.000 27.762 (1999-2000)
Employment: Unorganized
It is difficult to correctly arrive at the employment numbers, under different categories in the unorganized sector.
However, agriculture & related activities continues to be the dominating sector accounting for 70% of unorganized sector employment. Construction will be the next largest sector.
Wages Legislation
Minimum Wages Act 1948 Payment of Wages Act 1936. Equal Remuneration Act 1976 Companies Act 1952.
Definion of Wages
Minimum wages Act:
Wages" means all remuneration, capable of being expressed in terms of money, which would, if the terms of the contract of employment, express or implied, were fulfilled, be payable to a person employed in respect of his employment or of work done in such employment [and includes house rent allowance], but does not include(i) the value of- (a) any house, accommodation, supply of light, water, medical attendance, or (b) any other amenity or any service excluded by general or special order of the appropriate government; (ii) any contribution paid by the employer to any pension fund or provident fund or under any scheme of social insurance; (iii) any travelling allowance or the value of any travelling concession; (iv) any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment; or
Wage Indexation.
The system of DA (Dearness Allowance) to take care of effects of inflation. (cost of living). Indexation can be fixed or variable (indexation value decreases as income rises). Consumer Price Index used as the basis. Clearly followed in organized sector. On some states minimum wages revised periodically, so no requirement for indexisation.
(Freeze in DA)
Current Situation.
Payment in kind reducing. (only kind may be very rare) combination of cash and kind. Organized sector moving into Commercial Bank linked transactions. (ATMs/Cheque). Non-payment of wages still a cause for industrial dispute in organized sector.
However discrimination exists in terms of definition as: difficult work (men) and easy work (work) in same workplace. Also depending on type of employment contracts
Contract worker. Casual worker. Beck and call worker. Free labour/Help. Bonded/Child (illegal)
Bonus Payment
Payment of Bonus Act.
8.33% minimum bonus and 20% maximum, even for loss making organizations. Workers earning up to Rs 3500 (?) per month alone eligible. Government employees (earning limit applied) also given bonus, declared yearly.
In un-organized sector, one month equivalent (during festivals) is like a norm
Working Hours
Formal sector :- Factories Act
No adult workers shall be required or allowed to work in a factory for more than forty-eight hours in any week. (51) Subject to the provisions of section 51, no adult worker shall be required or allowed to work in a factory for more than nine hours in any day. The periods of work of an adult worker in a factory shall be so arranged that inclusive of his intervals for rest under section 55, they shall not spread over more than ten and a half hours in any day : Provided that the Chief Inspector may, for reasons to be specified in in writing, increase the spread over up to twelve hours.
Informal Sector: Based on conventions `sunrise to sunset unless the sector/location is unionized. Government 45 hours.
Overtime payment.
Workers under factories Act are eligible for overtime payment, for excess of 30 minutes - at twice the rates. Working on off days, holidays also eligible for overtime. Overtime specified under Minimum Wages Act. Government has abolished overtime in gov/Public Sector (now compensatory off).
Wage Boards.
Tripartite Wage Boards consists of equal representatives of employers and workers and an independent Chairman. Determined the wages and other remuneration to be given to the workers in industries, where wage boards are formed . Wage bargaining mostly took place at the industry level, and through Government controlled wage boards. First Wage Board (Divatia Wage Board) was constituted in May, 1956
Difference between Sunrise and Traditional Sectors. This is where freedom exists. Executive salaries have been shooting through the roof in India, particularly in sunrise sectors like IT, Bio Tech. In fact, NRI;s from North America are coming back since they find that earning potential is high.
Taxation Issues
Only in organized sector, three stage tax rate on wages. Only very few people covered (or actually pay taxes).
15%, 20%, 30% depending on annual income. No tax below Rs 1 lakh. Reforms are progressing