Enhance minimum wages for ‘sabka vikas’

The travails of the trapped workers in the Silkyara tunnel project and the laudable work of the rat-hole miners who saved them have evoked new respect for the labourers in our country and the risks they endure. However, are we ensuring their right to a dignified life while enjoying the conveniences created by their labour?

This question has been brought to the fore coincidentally through an order of the High Court of Karnataka, which has recently quashed 34 notifications on minimum wages passed in 2022 by the Karnataka Labour Department. The notifications have been quashed for not calculating minimum wages as per the Reptakos Brett judgement of the SC and that the rates fixed/revised “are unsustainable in law”. The HC has directed the state government to recalculate the minimum wage within three months.

This is a welcome order that holds much promise for the more than 1.7 crore wage workers of the state who have been waiting for decades for the proper implementation of several SC judgements in their favour. The SC had upheld in U Unichoyi & others vs the State of Kerala in 1962 itself the norms fixed by the 15th Indian Labour Conference in 1975 that minimum wages for a worker should cover food, clothing, housing, and light and fuel needs of a standard family. The Fair Wage Committee had recommended in 1948 that “the minimum wage must provide, not merely for the bare sustenance of life, but also for the “preservation of the efficiency of the worker.” These are costs that are to be borne by all employers at all times.   

Additionally, the SC, in the Reptakos Brett case in 1992, declared that “children’s education, medical requirements, minimum recreation, including festivals/ceremonies and provision for old age, marriages, etc., should further constitute 25 per cent of the total minimum wage” and that “each category of the wage structure has to be tested at the anvil of social justice.”

Despite these SC pronouncements respecting workers’ rights to dignified living, the current minimum wages announced by Karnataka, ranging from Rs 12,846.80 in Zone 4 areas to Rs 14,424.63 in Zone 1 for unskilled work, fall short of the Supreme Court norms and are insufficient for ensuring workers’ basic needs. This situation persists, as the National Commission on Labour, headed by Justice P B Gajendragadkar, reported in 1968 that “the minimum wage fixing authorities have generally accepted the formula in principle and departed from it in actual practice.” The Central Seventh Pay Commission calculated the minimum wage at the lowest level for government employees, based on 15th ILC guidelines, at Rs 18,000 at 2016 prices. Should this rate, recalculated at 2023 prices, be the floor-level minimum wage for all?

Employers, claiming inability to pay higher amounts, have urged the Labour Department to appeal against the HC  judgement. However, surveys show a sharp decline in the share of wages in value added, from 30 per cent in the 1980s to 9.5 per cent in 2009, while the share of enterprise profits has risen from around 15 per cent to 55 per cent. Studies since 2014 indicate a reduction in the growth of wage rates. This suggests a case for employers, at least those owning ‘macro-enterprises,’ to give a higher share of profits to their employees. Hence, their appeals, if any, for the withdrawal of higher minimum wages may lack a sound evidence base.

Employers argue that if minimum wages in neighbouring states are lower, small units and MSMEs would go out of business, unable to compete with units in other states, leave alone in the global market. But if the neighbouring state of Kerala can continue to have the highest wage rates in the country and has thus practically eliminated poverty, this is something for governments to think about. If there is a genuine cause among MSMEs, governments need to consider how they can be helped so that workers are not deprived of their basic entitlements.

When minimum wages are set below workers’ basic needs, it is in effect a subsidy being given to employers, as this necessitates the government fulfilling the basic needs of the workers by announcing various so-called ‘freebies’ or benefits with tax-payers’ money, such as the highly subsidised public distribution, housing and transportation systems, etc.

The India Wage Report of the ILO points out that “low pay and wage inequality remain a serious challenge to India’s path to achieving decent working conditions and inclusive growth.” This is also the reason why there is growing inequality in India. A recent United Nations Development Programme report found India’s economic inequalities in wealth and income to be among the highest in the world, showing an unequal distribution of the benefits of growth.

What use is racing towards a $5 trillion economy that will make us the third largest economy in the world if our per capita income stagnates at a low of $2,400 and we rank 149 among 194 countries? There needs to be a realisation that when more money is put in the hands of lower-income groups, there will be greater aggregate demand for goods and services, and the whole economy will thrive.

If the whole of society, including the private sector, shared the burden of removing poverty by paying just wages to workers, there would not be the prevailing clamour by every section to be declared ‘backward’ in order to claim the minuscule government jobs through reservation. If all jobs assured the poor proper wages, this clamour for reservations would end.

One hopes that the poor working and safety conditions under which most workers work, highlighted by the Silkyara tunnel episode, will evoke greater respect for the rights of workers. Society needs to willingly provide them with their rights and share the burden of evolving into a compassionate society that cares for all. Shouldn’t that be the goal of the much-publicised slogans Achhe Din and Sabka Saath, Sabka Vikas?

(The writer is the Executive Trustee of CIVIC-Bangalore)