CONCEPT OF WAGES

By
Anurag Mishra
Akash Mahor
Somendra Tomar
Sakshi Verma
Introduction
• Wage is a reward for the service rendered or
remuneration for the work done and it is as old as the
society itself.
• After industrialization the quantum of wages assumed a
common cause of friction between the employers and the
wage earners.
• Demand for wage increase resulted in strikes.
• The determination of adequate wages was not only
economic problem but was linked with various other
factors like place of industry, prices of the product, living
standard, basic needs and the govt, policies in a given
society
History
• Laissez faire continued to govern the field of
industrialization for quite a long time.
• First instance was 1918 dispute at Ahmedabad textile
industry where Gandhi ji played an important role.
• The strike of workers continued for 23 days and ended
with voluntary arbitration of both employees represented
by Gandhi ji and employers by Ambalal Sarabhai the
president of Mill Owners Association. They agreed for
payment of DA increase and determined the wages.
• However, third party intervention in industrial dispute
started through Trade Disputes Act, 1929 invoked by
Govt. only in selective cases.
Whitley Commission
• Commonly called as The Royal Commission appointed
during 1931-33.
• It examined various issues relating to wage- levels and
reported on minimum wages, standardized wages, wage
incentives and suggested for collection of relevant wage
data to resolve the wage determination.
• Recommended for minimum wages
• Brought govt. attention towards unfair deduction made by
employers.
• Called for making new law in this regard
• Outcome- Payment of wages act, 1936
Rege Committee
• Various ad hoc committees were constituted by govt. to
settle the wage disputes and recommend for wage
structure.
• It identified the difference in levels of wages in agriculture
and in industries and observed that such difference
should not be over-emphasized. It can be partly justified
because of conditions under which industrial workers
were made to work and live.
• ‘Agricultural wages are low’ could not be a justification for
keeping industrial wages low.
Industrial Truce Resolution, 1947
• Passed after World War II.
• With a view to save the industries from being affected by
World War II exigencies.
• This Resolution called upon labour and the management
to maintain industrial peace and avert strikes, lock-outs
and slowing down of production for a period of three years
and for the management to ensure fair wages to labour,
fair return on capital employed in the industry, and
reasonable reserves for the maintenance and expansion
of the undertaking'
The Industrial Policy Resolution 1948
• It fixed minimum wages in sweated industries and
stressed on promoting fair wage agreement in organized
sector of industries.
• Minimum Wages Act, 1948 was passed.
• Committee on fair wage was appointed.
• The committee described wages with reference to three
levels-
• Minimum wages
• Fair Wages
• Living Wages
• Various factors were recommended to fix the above.
Early history on kinds of wages
• The concept of wages can be traced back to the year
1907 when for the first time Justice Higgins, the president
of commonwealth conciliation and arbitration court,
Australia in the famous Harvester’s Case.
• It was held that Living wage was a first charge upon
industry, and it set a basic wage for unskilled labour at a
level substantially higher than existing rates.
He emphasized that minimum wage can be used as a
yardstick to determine living wage.
Further the concept crucially indicate various standard of
living of a worker and the actual amount in terms of money
is to be determined by the wage fixing machinery.
Kinds of wages
• Minimum wages- Justice Higgins- irreducible level of
wage paid to an unskilled worker, considering him a
human being living in a civilized society.
• Three important consideration-
• 1. it is irreducible
• 2. It is paid to unskilled worker
• 3. Worker is to be considered as a human being living in
civilized society and therefore he is entitled to basic needs
of food, clothing and shelter like any other human being.
Living wage
• One should not only provide for food, shelter and clothing
but for some frugal comfort of life, good education to
children, some amusement and provision for sickness and
old- age including some measure of social security.
• Express Newspaper Ltd v Union of India
• SC observed- living wage should enable the wage earner
to provide for himself and his family not only for the three
basic necessities of life but also for frugal comforts, good
education to children, protection against ill-health and a
measure of insurance against the more important
misfortune including old-age.
Crown Aluminum Works ltd v Their workmen

• The SC observed that though it is very difficult to define or

even to describe accurately the contents of living wage, in
an expanding national economy the contents of these
expressions also expand and vary.
• The committee on fair wage describes living wage as-
the living wage should enable the male earner to provide
for himself and his family not merely the bare essentials
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.
Fair wage
• The CFW defined three levels of wages- minimum, living and
fair wages.
• Fair wage is a mean between the living wage and the minimum
wage.
• Any amount in excess of minimum wage can be regarded as fair
wage and it continues to remain fair until it is merged into living
wage.
• Prof Pigou describes fair wage as-
• Fair wage in narrow sense
• Fair wage in wider sense
• A fair wage is narrow in sense if it is equal to the rate current for
similar work in the same trade and neighborhood. It is wider in
sense when it is equal to the predominant rate for similar work
throughout the country and in the generality of trades.
CFW

• Determination of Fair wage would depend not on the

present economic position of the industry but on its future
prospects also.
• In between these two limits the actual wage would depend
on-
• The productivity of labour
• The prevailing rates of wages
• The level of national income and its distribution
• The place of industry in the economy of the country.
• But actual weightage cannot be given to the above factors.
• Sangam Press v Its workmen- SC observed that 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.