Module 1:

Topic 3: Minimum wage, Fair Wage

and Living Wage

Presented By:
Nikita Begum Talukdar
 Introduction

◎ Fair wage Committee was set up in 1948 by the Central Advisory

Council (CAC) to look into the principles of fair wage for labour.

◎ The report of this committee is landmark in the formulation of wage

policy in India.

◎ It provided three levels of wages: Minimum wage, Fair Wage and a

Living Wage

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Levels of Wages

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FAIR WAGE

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◎ The committee on fair wage envisaged that while the lower limit
of wage must obviously be minimum wage , the upper limit is
equally set by what may broadly be called the capacity of the
industry to pay.
◎ This will not only depend on present economic condition of
industry but on future prospects. The wages will depend upon:
 Productivity of labour ;
 Prevailing rates of wages in the same or similar occupations in
the same or neighbouring localities.
 Level of national income and its distribution.
 Place of the industry in the economy of the country.

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◎ Fair wage means a mean between the living wage and the minimum wage.

In HINDUSTAN TIMES LTD. V. THEIR WORKMEN (1963):

◎ The SC defined fair wage as something above the minimum wage, which may
roughly said to approximate to the need based minimum wage, in the sense of a
wage which is adequate to cover the normal needs of average employee
regarded as human being in the society”

◎ In fixing minimum wage the capacity of the employer to pay is not considered to be
relevant.

◎ But in case of fair wage, besides the principle of industry-cum region, the
company’s capacity to bear the financial burden must receive due consideration.

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 In NOVEX DRY CLEANERS V. WORKMEN (1962) observed that
“it is now well settled that in fixing minimum wage, the capacity of the industry
to pay is not relevant, but in fixing fair wage the capacity of the industry to
bear the burden of the said wage is very relevant and important factor.
Where wage structure is being fixed with reference to those in similar industries
in the region, the standing of the Industries, strength of labour employed
extent of customers, profits and loss must be taken into account. It is also
necessary to access whether the employer would be able to meet the additional
liability.”

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◎ In determining the capacity of an industry to pay, it would be wrong to take
the capacity of a particular unit on the capacity of all the industries in the
country.
◎ The relevant criterion should be the capacity of a particular industry in a
specified region and as far as possible, the same wages should be prescribed for
all the units of that industry in that region.
In KAMANI METALS AND ALLOYS LTD. V. THEIR WORKMEN (1967):
J.HIDAYATULLAH OBSERVED:
◎ “Fair wage lies between the minimum wage which must be paid in any event
and the living wage which is the goal”
◎ Thus the concept of fair wage implies a wage sufficiently high to enable a worker
to provide to his family food, shelter, clothing, medical care , education of
children appropriate to his status in life.

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 HINDUSTAN TIMES LTD. V. THEIR WORKMEN

• It has been observed that at the bottom of the ladder there is the minimum basic wage
which the employer of any industrial labour must pay in order to be allowed to continue
an industry.

• Above this is fair wage, which may roughly be said to approximate to the need based
minimum, in the sense of a wage which is adequate to cover the normal needs of the
average employee regarded as a human being in the society.

• Above the fair wage is the living wage. It is a wage which will maintain the workmen in
the highest state of industrial efficiency, which will enable him to provide his family
with all the material things which are needed for their health and physical well being and
will be enough to enable him to qualify to discharge his duties as a citizen.

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Living Wage

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• According to the Fair Wage committee: Living Wage is the highest level of the wage

• It would include all the amenities which a citizen living in a modern civilized
society was entitled to expect when the economy of the country was sufficiently
advanced and the employer was able to meet the expanding aspirations of his
workers.

When determining the living wage, account had to be taken of the:

 prevailing economic conditions such as the national income and

 the capacity of the industry concerned to pay this wage.

• The Committee therefore considered the living wage as the ultimate goal or target
to attain.

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• In our country for certain reasons there is no statutory definition of living wage.

• But it may be pointed out that Fair wage committee in its report observed that it was not
possible to fix a living wage in the context of low level of our national income.

• However, the term living wage has ben defined by the fair wage committee (1949) As
follows:

• “The living wage should enable the male earner to provide for himself and his family not
merely the bare 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 the more important misfortunes including
old age”

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• The concept of living wage may vary from country to country, place to place
because it depends upon the price level of necessaries of life and it is
determined by the socio-economic conditions of a particular country.

• In short living wage is a political ideal to be achieved and it means and

includes salary, pay or remuneration for the work done, which is quite essential
for providing necessities of life such as food, cloth and shelter including
maintenance of health, education, frugal comforts and certain means of
recreation which are quite essential for a person to lead his life in society as
human being…

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 Conclusion

• The Fair Wages Committee drew a clear distinction between a

minimum and a living wage, observing that the former was a

lower level than the latter.

• In regard to the fair wage, the recommendation was that it should

be above the minimum wage and below the living wage

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 Thanks!

Any questions?

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