The labour ministry has proposed a minimum monthly wage of `10,000 for contract workers, where the existing wages are less than that, to which strong reactions from industries and employees are obvious. There certainly is a compelling need to relook and reform the age-old wage laws, but what’s the rationale behind universalising the minimum wages when each state’s need and situation differ from the other? There is no economic or social justification in guaranteeing the same minimum wage to contract workers in rural or backward areas and metropolitans. Nor it is reasonable to impose higher wages on industries, which do not hold potential to bear the burden. At the same time, it is also unfair to give lesser wages to workers in industries, which can afford much more, merely because of weak bargaining power. Further, the Minimum Wages Act and notifications thereunder amended from time to time distributes workers into categories such as skilled, semi-skilled, unskilled, graduate, matriculate, etc. and the wages are fixed accordingly. The ministry’s proposal wipes out this basic distinction with respect to contract labour.
It seeks to amend Rule 25 (2)(iv) of the Contract Labour Rules, 1971 framed under the Contract Labour (Regulation and Abolition) Act, 1970. Pursuant to the amendment, workmen will be paid wages not less than the rates prescribed under the Minimum Wages Act, 1948 or where the rates have been fixed by agreement, settlement or award, not less than the rates so fixed or `10,000, whichever is more. Undoubtedly, the conditions of contract labourers are deplorable and need amendments, but fixing a wage structure ignoring various distinctions between employers, employees, cost of living index, paying capacities, etc. is not the solution.
The Supreme Court in its judgments has held that paying capacity of industries should be considered apart from other factors such as industry-cum-region etc. while fixing the wage structures. The move may negatively impact such industries which operate on thin margin and may not be able to hire people at such income. One of the respected national labour institutes has estimated in a study that there are over 3.6 crore contract labourers in the country, of which only 60 lakh are covered under the Contract Labour Act. The study also stated that 30 per cent of workers in private sector and 32 per cent in the public sector are employed as contract labour. If wallets are unable to bear the burden of the proposed amendment, then the number of hirings will shrink majorly, creating unemployment.
The situation of contractors and other temporary workers is indeed distressing, especially in backward areas. The current wage structure needs revision and sectors where employees can get more wages must be catered to. That said, an organisation’s paying capacity, its structure, as well as nature of the job performed, etc. are aspects to be considered instead of creating uniform wage structure. When a government directs an increase in minimum wage, it doesn’t mean free lunches. If it mandates payment of higher wages, then businesses make adjustments to pay for the added costs, by reducing hiring and benefits, charging higher prices, etc. Changes in minimum wages should be done keeping in view today’s sluggish economy. The most urgent need is to focus on policies which would generate faster economic growth, ipso facto causing a rise in wages and creation of more jobs.
In a nutshell, though an amendment must be brought about, it should be based on employers’ affordability, employee needs and other such factors. Procedures must be framed which ensure that the laws, existing or amended, are also implemented in letter and spirit.
raavibirbal@gmail.com
Birbal is an advocate specialising in labour, civil,litigation and corporate laws