The document discusses the need for wage policy and the relationship between wages and employment in India. It provides context on wage concepts like minimum wage, living wage, and fair wage. It outlines several reasons for the need of a wage policy in India, including low pay, growing income inequalities, high unemployment, and regional disparities. The objectives of wage policy are also discussed. The relationship between wage policy and employment is complex, as employment is affected by many other economic and social factors besides wages. The document then examines India's post-independence wage policies and laws. It also discusses gender discrimination prevalent in India's wage structure and policies.

1. NEEDFORWAGEPOLICYANDRELATIONSHIPBETWEENWAGESANDEMPLOYMENT
Submitted to
Dr. Hemu Rathore, Associate Professor, Department of RMCS, CCAS, MPUAT Udaipur
Submitted by
Kavita Kachhawa, PhD student, Department of FSN, CCAS, MPUAT, Udaipur

2. ◦ Contents
 Wage policy: concept, meaning and components
 Need for wage policy
 Relationship between wage policy and employment
 Wage policy in India and its impact on employment
 Gender discrimination among wage policy

3. Wage: meaning and components
◦ Wage is paid to the assembly line workers or worker at operational level. It is
paid hourly/daily/weekly.
◦ The term “Wage Policy” refers to legislation of government action undertaken
to regulate the level or structure of wages or both for the purpose of achieving
specific objectives of social and economic policy.
◦ There are two components of wages: financial and non-financial
Financial Non-Financial
Basic wages Nature of job: responsibilities, prestige,
Monetary benefits: medical, insurance Growth prospects
Incentives Working environment

4. Three concepts of wages are:
1. Minimum wage: Minimum wages have been defined as the minimum amount of remuneration that an
employer is required to pay wage earners for the work performed during a given period, which cannot
be reduced by collective agreement or an individual contract.
◦ It is necessary for bare sustenance of life along with preservation of the efficiency of the workers
by providing some measures of education, medical care etc.
◦ Collective agreements on wages used to establish minimum standards as well as to set wages
above an existing wage floor.
1. Living Wage: It is not only for the bare essentials for the worker and his family but also for comfort
protection against ill-insurance for old-age.
2. Fair wage: It is in between minimum wages and living wages but below the living wage

5.  At the global level, in 1944, the ILO Declaration of Philadelphia referred to the importance of wage policies “to
ensure a just share of the fruits of progress to all, and a minimum living wage to all employed and in need of such
protection”. This was reiterated in the 2008 ILO Declaration on Social Justice for a Fair Globalization.
 In developing countries, due to following reasons wage policies are required:
For workers: For economy:
To protect workers against exploitation or unduly low wages To stabilize prices
To improve workers efficiency and performance To accelerate nation’s development process
To encourage acquisition of new skills Fair return to labour and capital
To provide incentive to labour mobility Supply of consumer goods at stable and fair price.
Maximize national income
Full employment
Optimal allocation of resources
Minimum income security for all sections of the
community
Need for wage policy

6. Along with the above-mentioned reasons, wage policy in India is needed due to several other factors i.e.:
1. Low Pay: In 2011–12 NSSO employment survey reported that, the average wage in India was about 247 rupees (INR) per day, and
the average wage of casual workers was an estimated INR 143 per day.
2. Increasing population pressure: as per the world Bank (2020) India with 138 crore individuals in 2020, is the second largest
populous country of world with annual population growth rate of 1% and it may surpass China in 2026.
3. Growing income inequalities: The Gini (inequality in income distribution) coefficient points to an increasing inequality in India. The
coefficient in 2014 was 34.4 per cent (100 per cent indicates full inequality and 0 per cent full equality). The coefficient increased to
35.7 per cent in 2011 and to 47.9 per cent in 2018. India is only second to Russia in the world in terms of inequality. And only the
top one per cent in India earned 21 per cent of total country’s income in 2019.
4. Historical past: The legacy of gender and caste discrimination and British colonization and suppression with low wages still have
their marks on the Indian economy.
5. Dualistic economy: The dualistic nature of the economy has led to the segmentation of the labour market: into regular/salaried
employees (mostly formal, when they are covered by social security), and self-employed and casual workers (informal)
6. Increasing unemployment: As per the NSSO report 2019, the unemployment in India stood at 6.1% in the financial year 2018 which
was highest in last decade.

7. 7. Low GDP growth rate: According to the IMF World Economic Outlook (October-2020), GDP (nominal) per capita of India in 2020 is
projected at $1,877 at current prices. India is the sixth-largest economy in the world. But its still very less as compared to average of
developed economies i.e., 8000$.
8. Social discrimination: gender and caste discrimination
9. Highly segmented and informal economy: In terms of employment share the unorganised sector employs 83% of the work force and 17%
in the organised sector. There are 92.4% informal workers (with no written contract, paid leave and other benefits) in the economy. There
are also 9.8% informal workers in the organised sectors indicating the level of outsourcing.
10. Unorganised sector workers which are still excluded from minimum wage system like Domestic workers, Workers in agriculture,
Workers in family businesses, small enterprises, apprentices and trainees, Workers with disabilities, Workers of non-specified works
11. Regional disparities: Most of the regular/salaried workers (75 per cent) are found in the urban labour market, whereas the rural labour
market is largely composed of casual workers (80 per cent).
12. Low level of skill and productivity: However, the World Bank reports that at present only 2.3 per cent of the workforce in India has
formal skills training. And these training programme also suffer from inadequate quality and relevance, lack of coordination within the
sector, with insufficient attention to labour market outcomes. In addition, the current training capacity is grossly inadequate to respond to
the country’s needs.

8. Objectives of wage policy:
◦ The ILO (International Labour Organization) has enumerated four objectives of a wage policy in developing
countries:
1. To abolish malpractices and abuses in wage payment
2. To set minimum wages for workers whose bargaining position is weak because they are unorganised accompanied
by separate measures to promote the growth of trade unions and collective bargaining
3. To obtain for workers a just share in the fruits of economic development, supplemented by appropriate measures
to keep workers expenditure on consumption goods in step with available supplies so as to minimize inflationary
pressures
4. To bring about efficient allocation and utilization of manpower through wage differentials and more appropriate
systems of payments and results

9. Relationship between wage policy and employment:

10.  However, the employment status is not only affected by minimum wages but also with the skill level of
worker, economic status of the country, amount of labour force, technological advancement, education,
availability of infrastructure and resources, poverty level, population, inflation rate, capital and labour
investment and productivity etc.
 Thus, A sound wage policy is necessary to maintains industrial peace, satisfies both the employers and
the workers, increases the output of the firm and efficiency of workers, reduces costs and maximizes
profits.

11. Wage policy in India
◦ Pre independence:
 In pre independence era, wage policy was arbitrary, conventional, extortionary, customer-based
following the traditional agrarian-cum-feudal systems without having any bearing on industrial society
and factory system. The British rule in this respect in India followed the familiar pattern of business and
commercial policy of the East India Company. However certain acts were passed to regulate the
minimum wages and working hours
 Laws related to wage policy:
1. Workers compensation act, 1926
2. Payment of Wages Act, 1936: for regular and timely payment

12. ◦ Post-independence: after independence, the concept of minimum and fair wage wages was not only enshrined in the
constitution but also several acts were passed to achieve it.
 Five-year plans: Under Five Year Plans, both labour intensive and capital-intensive wage policy was a sine qua non
of dualism in mixed economy. Till the sixth five-year plan, wage policy gets attention for minimum wages to fair
wage system.
 Constitutional provisions: Article 43 of Directive Principles of State Policy of Indian Constitution lays down the
following relating to living wage: The state shall endeavour to secure, by suitable legislation or economic
organisation or in any other way, to all workers, agricultural, industrial or otherwise, work, a living wage.
 Laws related to wages:
1. Industrial labour dispute act, 1947
2. Minimum Wages Act, 1948
3. Payment of Bonus Act, 1965
4. Equal remuneration Act, 197
5. The Code on Wages bill 2019: is placed in parliament to consolidate provisions of above four labour laws concerning
wages and bonuses, while allowing for timely payment of wages for workers in India.

13. ◦ Along these several labour acts have indirect effect on wage status of individuals are:
1. Maternity Benefit Programme, 1961
2. Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), 2005
3. Street Vendors (Protection of Livelihood and Regulation of Street Vending) Act 2014
4. Three new labour codes – the Code on Social Security, the Industrial Relations Code (“IR Code”) and the
Occupational Safety, Health and Working Conditions Code (“OSH Code”) 2019
 Wage boards: Statutory body to tackle the disputes relating to the employers or the employees.
 Recommendations of various Wage Boards, Pay Commissions, recommendations of Indian Labour Conference, and
awards of Industrial Tribunals’ and Court rulings.

14. India’s Wage Employment Structure:
◦ Employment status in India: In 2020, 41.49 percent of the workforce in
India were employed in agriculture, while the other half was almost evenly
distributed among the two other sectors, industry and services. While the share
of Indians working in agriculture is declining, it is still the main sector of
employment.
◦ India offers national-level minimum wage at around INR 176 (US$2.80) per
day, which works out to INR 4,576 (US$62) per month. It must be noted that
India’s minimum wage and salary structure differs based on the following
factors: state, area within the state based on development level (zone), industry,
occupation, and skill-level.

15. Wage employment structure in India:

17. ◦ Along with this, India is undergoing a major demographic transition. The
working-age ratio in India’s population is projected to increase from 64 per
cent in 2013 to 69 per cent in 2040 –India would thus become the largest
contributor to the addition in the global workforce. Although the number of
working-age people might increase in absolute terms, but that would not
necessarily translate into more workers. For example, the participation of
women in India in the workforce is quite low. According to the World Bank’s
study based on the period between 2004-05 and 2011-12, the female labour
force participation (FLFP) rate in India was 27 per cent as compared to China’s
63.9 per cent. Given that the females make up for almost 50 per cent of India’s
population, their extremely low proportion joining the workforce is having a
drastic negative impact on the overall proportions of labour force in the
country.

18. Gender Discrimination in wage policy:
 Equality of opportunity and treatment is addressed in the ILO Equal Remuneration
Convention, 1951 (No. 100), and discrimination with regard to employment and occupation
in the Discrimination (Employment and Occupation) Convention, 1958 (No. 111), which
have been ratified by 90 per cent of ILO member States.
 These Conventions are two of the eight fundamental ILO Conventions which provide a legal
framework for countries to work towards their own legislation. Globally, the gender wage
gap has narrowed significantly in the last two decades. In 2015 it was estimated to be about
23 per cent, with women earning 77 per cent of what men receive, on average (ILO, 2016c).
This gap can be estimated on a monthly or an hourly basis, and the latter removes the effect
on the pay gap of the fact that women are engaged more often in part-time work than men.

19.  Gender pay gap refers to the difference in earnings between women and men in the paid employment
and labour market. It is reflected by
1. Unequal pay
2. Unequal representation
3. Disproportionally concentrated in lower-income jobs, and female-dominated occupations

20. Example 1: The ILO global report (2017) indicates that, at every education level, women earn
less as compared to men.

21. ◦ Example 2: India ranks 140 out of 156 countries in World
Economic Forum's (WEF) gender gap index in 2021, with huge
decline in economic and political participation and opportunities.
◦ Example 3: According to occupational wage survey of the
Labour Bureau, Government of India, during 1958-75
difference between the earnings of men and women workers in tea
plantations rose from 11 paise to 98 paise, in coffee plantations it
registered a rise from 46 paise to 117 paise, and in rubber
plantations the difference was between 48 paise and 142 paise

22. Example 4: NSSO Survey 2004–05 to 2011–1

23. Factors that contribute gender discrimination
in wage policy:
1. An undervaluation of women’s work and discrimination in pay;
2. Workplace characteristics (e.g., how substitutable workers are for each other,
the value of face time, etc.);
3. Gender segregation channelling women into low value-added jobs;
4. The overall wage structure in a country – which may be shaped by wage-
setting mechanisms that may have been designed with a focus on workers in
male-dominated sectors);
5. The view of women as economic dependants; and
6. The likelihood that women are in unorganized sectors or not represented in
unions
7. Family behavioural patterns where motherhood can play a major role.

24.  Indian Government steps to reduce/eliminate gender discrimination in wage and labour policy
1. Article 16 of constitution: equal opportunity for employment
2. Maternity benefit scheme, 1961
3. Equal remuneration act, 1976
4. Gender responsive budgeting

25. THANK YOU