Minimum Wage is the lowest wage determined by law or contract, which an employer may pay an employee for a specified job. The modern minimum wage, combined with compulsory arbitration of labour disputes, first appeared in Australia and New Zealand in the 1890s. In 1909, Britain established trade boards to set minimum wage rates in certain trades and industries, and the first minimum wage in USA was enacted in 1912. Minimum wage laws or agreements now exist in most nations.
Minimum Wages Bill was passed by the erstwhile Indian Dominion Legislature and the Minimum Wages Act (the Act) thus came into force on 15th March 1948. Under the Act, both the State and the Central Government are “Appropriate Governments” for fixation/revision of minimum rates of wages for employments covered by the Schedule to the Act.
There is, however, no uniform and comprehensive wage policy for all sectors of the economy in India. Wages in the organized sector are determined through negotiations and settlements between employer and employees. In an unorganized sector, where labour is vulnerable to exploitation, due to illiteracy and lack of effective bargaining power, minimum rates of wages are fixed/revised by the Governments only for ‘scheduled employments’ under the provisions of the Act. The rates of wages are revised at an interval not exceeding five years.
Minimum wage is a matter of social justice that helps reduce exploitation and ensures that workers can afford basic necessities. The employer notwithstanding the want of financial capacity, must pay the minimum wage because employer’s capacity to pay has no bearing in fixing the minimum wages [refer Woolcombers of India vs. Workers Union AIR 1973 SC 2758]. Such consideration is antilogous to the principles enshrined in the Constitution of India [refer Unichoyi vs. State of Kerala 1961 (3) FLR 73, 1961 (1) LU 631]. Factually, this is one principle which admits no exception.
No industry has the right to exist unless it is able to pay its workmen at least a bare minimum wage. If an employer cannot maintain his enterprise without cutting down the wages of his employees even below a bare subsistence or minimum wage, he would have no right to conduct his enterprise on such terms [refer Bakshish Singh vs. Darshan Engineering Works 1994 LLR 61 SC; Crown Aluminum Works v. Workman AIR 1958 SC 30].
The questions which arise are whether ‘Minimum wage’ as determined by the Government under the Act guarantees workers a ‘Living wage’? More importantly, whether ‘Minimum wage’ so determined guarantees workers to live their lives with human dignity? ‘Wages’ and ‘right to live with human dignity’ are two important aspects of statutory enactments/pronouncements in this context. Wage under the Act means all monetary remuneration except “supply of light, water, medical attendance etc.”, so essential for living with human dignity!
Article 21 of the Constitution of India contains the “finer graces of human civilization” [refer P. Nalla Thampi vs. Union of India 1985 Supp SCC 189]. The expression ‘life’ in Article 21 does not connote merely physical or animal existence. Right to life includes right to live with human dignity [refer Francis Coralie Mullin vs. Administrator, Union Territory of Delhi (1981) 1 SCC 608]. It is the fundamental right of every citizen to live with human dignity, free from exploitation. The right to live with human dignity, therefore, includes protection of the health and strength of workers, men and women, and of children against abuse; facilities for children to develop in a healthy manner and in conditions of freedom and dignity, educational facilities, just and humane conditions of work, and maternity relief. These are the minimum requirements which must exist in order to enable a person to live with human dignity and the State does not have the right to take any action which will deprive a person of the enjoyment of these basic essentials. The state could be compelled through judicial procedure to make provision by statutory enactment or executive fiat for ensuring that these basic essentials are present since they together comprise a life of human dignity. Where a legislation is already enacted by the State providing these basic requirements, it can be obligated to ensure observance of such legislation for inaction on the part of the State in securing implementation of such legislation and it would amount to denial of the right to live with human dignity [refer Bandhua Mukti Morcha vs. Union of India AIR 1984 SC 802].
‘Socialism’ in the Preamble of the Constitution of India envisions a dream for establishment of egalitarian social order through rule of law. Fundamental Rights and Directive Principles are the means, to achieve the object of democratic socialism. It must be read from the goals, inter alia, Articles 14, 21, 23,39,43 and all other cognate articles seek to establish, i.e., to reduce inequalities in income and status and to provide equality of opportunity and facilities. Social justice enjoins to uphold endeavor to remove economic inequalities, to provide decent standard of living to the poor and to protect the interest of the weaker sections of the society and assimilate and integrate them in a secular integrated socialist India with dignity of person and equality of status to all.
Wages are an important element, which ensure availability of basic essentials for a large cross section of workers that go to make up a life with basic human dignity. It is here that the concept of “Living Wages” becomes important. Wages, as defined by the Act and as determined by governments from time to time, falls far short of empowering a worker to avail those minimum basic essentials which make up for a life with human dignity. Wage for a workman is the foundation to enjoy many fundamental rights. When wage is the source of income, the right to living wage would become as much a fundamental right. The Supreme Court, in C.E.S.C. Ltd. v. S. C. Bose (AIR 1992 SC 573) has held that right to social and economic justice is a fundamental right. Should minimum wages correspond to the “Living wages”, which actually provides for realistic standards of food, clothing and residence? Would it then satisfy the test of Article 21? The concept of ‘wages’ as originally envisioned under the Act did not include house rent allowance. It was only introduced in 1957. The real question is, therefore, as to how realistically it is taken into account while arriving at minimum wages in a city, say, like Delhi? While considering the nature and content of fundamental rights, the courts must not be too astute to interpret the language in a literal sense so as to whittle them down. The courts must interpret the Constitution in a manner which would enable the citizens to enjoy the rights guaranteed by it in the fullest measure [refer Sakal Papers (P) Ltd. vs. Union of India and Ors AIR 1967 SC 305]. The Supreme Court has stressed on the needs of changing society and liberal construction of laws conferring benefits on weaker classes. Law cannot stand still; it must change with the changing social concepts and values. If the law fails to respond to the needs of changing society, then either it will stifle the growth of the society and hamper its progress or if the society is vigorous enough, it will cast away the law which stands in the way of its growth. It cannot be gainsaid that right to life guaranteed under Article 21 embraces within its sweep not only physical existence, but also the quality of life. If any statutory provision runs counter to such a right, it must be held unconstitutional. A challenge for the transformation of the minimum wages into the “Living wages” could be mounted from this perspective, as right to life, set out in Article 21, means something more than mere survival or animal existence [refer State of Maharashtra vs. Chandrabhan Tale AIR 1983 SC 803].
Right to live with human dignity and right to living wages are integrated and inter-dependent. If a person is deprived of living wage, his very right to life is put in jeopardy. The current minimum wages, irrespective of the paying capacity of the industry, must be something more than subsistence wage which would be sufficient to cover the bare physical needs of the worker and his family including education, medical needs, amenities adequate for preservation is his efficiency [refer Express Newspapers Ltd. vs. Union of India [1959] SCR 12]. Could therefore the minimum wages as provided by the Governments in India under the Act and for which the workers are forced to work due to compelling socio – economic needs, actually amounts to forced labour, or does it fall foul to Article 23 of the Constitution of India?
The term begar mentioned in Article 23 of the Constitution is of Indian origin and well understood in ordinary parlance as compulsory or involuntary labour with or without payment. It also means making a person work against his will and without paying any remuneration therefor. The Supreme Court has ruled that, to bring a case within the mischief of clause (1) of Article 23 it must be established that a person is forced to work against his will and without payment. Article 23 is designed to protect the individual not only against the State but also against other private citizens. The makers of the Constitution thought it prudent to include a provision like Article 23 as a fundamental right. The true scope and meaning of the expression ‘traffic in human being and begar and other similar forms of forced labour’ unmistakably includes every form of forced labour, begar or otherwise within the inhibition of Article 23 and it makes no difference whether the person who is forced to give his labour or service to another is remunerated or not. It strikes at forced labour in any and all manifestations because it is violative of human dignity and is contrary to basic human values.
In India, majority of workers or “workmen” are forced and obliged to accept remuneration at a rate provided under the Act because of abject poverty, hunger, destitution, unemployment or other similar circumstances. Any factor which deprives a person of a choice of alternatives and compels him to adopt one particular course of action may properly be regarded as ‘force’ and if labour or service is compelled as a result of such ‘force’, it would be ‘forced labour’. Where a person is suffering from hunger or starvation, has no resources and no other employment is available to alleviate the rigour of his poverty, he would have no choice. He would be in no position to bargain with the employer; he would have to accept what is offered to him. And in doing so, he would be acting not as a free agent with a choice between alternatives but under the compulsion of economic circumstances and the labour or service provided by him would be ‘forced labour’ [refer People’s Union for Democratic Rights and Ors. vs. Union of India and Ors (1982) 3 SCC 235].
The Act, though a social welfare legislation, has been a victim of inertia and lethargy in the government administration. It has to be appreciated that mere passing of welfare legislation for the upliftment of the downtrodden, is by itself not sufficient. What is important is that every law enacted, particularly welfare legislations for the benefit of the weaker sections, must be implemented in the proper spirit for achieving the noble object for which such legislation is passed. Implementing the law has, necessarily to be effected through human agencies. Unfortunately, frailties of human nature and degeneration of human character often add to existing problems instead of solving them! The courts, however, can step-in by giving purposive interpretation to social welfare legislations in light of the changing needs, especially the new economic dynamism being witnessed post liberalization.
The Act was passed with the object of providing for fixing minimum rates of wages in certain employments. However, under the Act the whole exercise of fixing minimum wages has been left to the unfettered discretion of the Government, and even when a Committee is appointed, the report or advice of such Committee is not binding on the Government. Is it fair that the largest employer in India be vested with the responsibility of deciding Minimum Wages? Has the Government lived up to the expectation? It could have. Instead, the courts have had to direct to make the wages realistic, commensurate with the price rise in essential commodities [M/s. Hydro (Engineers) Pvt. Ltd. vs. The Workmen 1969 (18) FLR 189]; to take into consideration the components such as children education allowance, medical requirements, minimum recreation, provision for old age and marriage, etc. which should be additional 25% of the total Minimum wages [The Workmen vs. The Management of Reptakos Bret & Co. Ltd 1992 LLR 1(SC)].
It is worrying to note that minimum wages in India have not kept pace with the spirit of liberalization. There is no effort on the anvil to examine the realistic aspect of the minimum wage vis-à-vis the newly emerging socio- economic relationship in India, especially after 1991. In Indonesian, minimum wages tripled in nominal terms, and doubled in real terms, in the first half of the 1990s. Whereas trends in minimum wages in India indicate that it varies, broadly, between not more than Rs 150 to not less than Rs 55 per day or so for various categories of workers. It means the highest wage that a worker could earn is about Rs 4500 per month. Recently, there has been about 33% hike in the minimum wages in Delhi. Will it suffice? The bulk of informal sector workers are actually on the other end of the spectrum earning about Rs 1650 per month. Sadly, the principal arbiter of the minimum wage in India, i.e. the Government, seems to be rather content with following the letter of the law under the Act, than following the spirit of the Act and work that is towards the rationalization of minimum wages as “Living wages”.
What therefore is the true and correct import of the expression ‘wages’ as defined in section 2 (h) of the Act? Does ‘Minimum wage’ as determined by the Appropriate Government guarantee a ‘Living wage’ to the worker? Is ‘Minimum wage’ so determined, sufficient to live a life with human dignity? Whether the current standards of minimum wages are in conformity with the mandate of Articles 21 and 23 of the Constitution of India? Whether nonrationalization of ‘Minimum wage’ into ‘Living wage’ would result in ‘forced labour’? These are but a few questions to ponder over.
The idea of elevating the ‘restricted statutory right to Minimum Wages’ to the status of ‘Fundamental Right to Living Wages’ would to some extent bring the concept of Minimum Wage as envisaged under the Act. This would also be in conformity with the current needs of the society, thereby giving effect to Directive Principles of the State Policy in real terms and introduce better living conditions for the workers without any differentiation.
Sunil Tyagi Senior Partner, Zeus Law Associates (New Delhi)
The concept of minimum wages evolved in reference to remuneration of workers employed in industries where the level of wages was significantly low and where no arrangements existed for effective regulation of their wages due to poor bargaining power of such workers. In order to protect workers’ rights in a regime of rapid industrialization and in furtherance of obligations of the State under Directive Principles of State Policy, the Minimum Wages Act 1948 was enacted to protect workers’ rights to earn means of livelihood. True and correct import of ‘wages’ has to be looked at keeping in perspective this reality.
Article 21 of the Constitution guarantees a person the right of his life not being extinguished or taken away, for instance, by imposition of death sentence. However, it is important to view the broader connotations of the expression ‘right to life’ under Article 21 as also encompassing such person’s right to means of livelihood. As deprivation of a person’s means of livelihood will make it impossible for him to live with dignity, the right to life should be seen as being at par with the right to means of livelihood. In this context, the current standards of minimum wages in India are grossly inadequate to cover the bare physical needs of a person and of his family which include their needs of food, shelter, education as well as medical needs.
Given the geometrical rise in inflation affecting cost of living, especially in urban areas, the current standards of “minimum wages” are severely inadequate, thus explaining the proliferation of slums and massive migration of rural population to urban areas in their struggle to make ends meet. The exaction of labour and services against payment of wages less than minimum wages amounts to forced labour within the meaning of Article 23. Payments less than minimum wages in return for a person’s hard work and labour undoubtedly affect his fundamental rights enshrined under articles 21 and 23.
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