Government’s national floor wage ₹2 more than in 2017 and below minimum wages in 28 out of 29 states

On 30th July 2019, the Modi Government passed the Code on Wages Bill 2019 in the Lok Sabha, which provides for a national floor wage.

On 23 July 2019, while tabling the Bill, the Labour Minister, Mr. Santosh Gangwar simultaneously proclaimed—obviously to reassure the corporates—a Cabinet decision to hike the national floor wage to Rs.178 per day—a ridiculous increase of Rs. 2 from the national floor wage of Rs.176 fixed in 2017 ! This is even more ridiculous because this national floor wage is below the prevailing statutory minimum wage in 28 out of 29 States, the sole exception being Nagaland ! What is the point of coming up with such a floor wage?

Moreover, floor wage is the floor for the minimum wage. Mr. Ramalingam Ilangovan, a prominent leader of the railway workers, sarcastically dismisses the floor wage prescribed as ‘below-the-floor’ wage or ‘subterranean wage’! In a well-researched study in Tamil, he argues that the floor should be the basic minimum needed for the survival of the worker and her/his family. “If the Centre fixes it at ₹178 per day, how many families can survive on such a paltry amount”, he asks.

According to his study, the guidelines to fix minimum wages were set out in the 15th Indian Labour Conference of 1957 on the basis of a requirement of 2700 calories of food intake per day, which was further expanded with an addition of 25 per cent to meet educational and entertainment expenses in the famous Raptakos Brett judgement by the court.

There were many omissions and underestimates in that calculation too. For instance, in the 15th ILC recommendations there was a provision of 7.5 per cent of the basic pay for house rent allowance. If a worker earns ₹10,000 per month, he/she is entitled for ₹750 as house rent allowance. Even with ten times this amount, it is very difficult for a worker to rent in a one-bedroom house in big metros like Mumbai and Bangalore.

The Code on Wages doesn’t address such shortcomings. Rather, the Centre announces a floor even below one-third to one-fourth of prevailing market wages in many occupations. It can only exert a downward pull on the minimum wages being fixed at the State level and can make the minimum wage ‘the maximum wage’!“This law, in effect, would turn into a law for wage squeeze”, Mr. Ilangovan argues!

This Code on Wages would subsume four other laws relating to wages, including Equal Remuneration Act. But this law offers no concrete provisions to overcome the gender wage gap. If a woman worker doing the same work is subjected to gender discrimination in wages, there is no provision in the law under which she can approach the court to claim back wages.

The earlier Minimum Wages Act had such a provision regarding non-payment of statutory minimum wages and there were several instances where courts have ordered payment of back wages for non-payment of minimum wage.

This in itself acted as deterrence for enforcement to some extent, especially in state-controlled departments like PWD and state agricultural farms, sericulture farms etc. But there are no such provisions in this law. This in itself shows that this coding exercise of the Modi Government in the name of amalgamation of 44 labour laws into 4 labour codes is a cheap ploy to whittle down the labour laws and scrap many labour rights.

Today, the only expanding areas of employment are in the arena of gig economy and gig workers working as delivery boys and girls in e-commerce firms, household service workers, cabbies etc., already numbering several millions in Indian cities.

The managements of these firms claim that these are not their workers but freelancers and the commission they get doesn’t amount to wages. But a case filed by a taxi workers’ union claiming that Ola and Uber taxi drivers are workers is pending in the Delhi High Court.

As far back as in 1978, in Hussainbhai’s case the Supreme Court held that the true test to determine employer-employee relationship is that of ‘economic control’, and thus where a worker, or group of workers, labours to produce goods or services and these goods or services are for the business of another, that other is, in fact, the employer. He/she has economic control over the workers’ subsistence, skill and continued employment.

However, in a conflicting and retrograde judgement in 2004 in Nilgiri case, Supreme Court held that the following factors shall also be taken into account to determine whether employer-employee relationship exists or not: (a) who is the appointing authority; (b) who is the pay master; (c) who can dismiss; (d) how long alternative service lasts; (e) the extent of control and supervision; (f) the nature of the job, i.e., whether it is professional or skilled work; (g) nature of establishment; (h) the right to reject.

If all these conditions were to be applied, not only gig workers but majority of Indian workers, including many contract workers, casual workers and temp workers would not qualify as workers at all!

But there are several other judgements by the same Supreme Court which affirm that these categories are indeed workers. Still, in view of the anomalous position in labour jurisprudence on this crucial issue a new legislation on the related issue should clarify the matter. But this Code on Wages miserably fails in this regard.

The Occupational Safety, Health and Working Conditions Code Bill of 2019 tabled along with the Code on Wages but yet to be passed, subsumes 13 existing laws including those for beedi, construction and mining and several such State-level acts too.

But the States were not consulted. These laws dealt with not only wages but also many other service conditions, and had also laid down welfare measures through welfare funds etc. The fate of such welfare funds, for which workers had paid thousands of Crores, has now gone into a limbo. Hence, once this law comes into force, it can be challenged in the higher judiciary as being illegal and unconstitutional.

Ten unions observed August 2 as national protest day against these codes, sounding the bugle for a protracted Armageddon.