India has seen the concept of wages since time immemorial. Our history has many illustrations of labors, wages, incomes etc. the wages for different activities have always varied and have not always been very congruous with the work involved. In India in 1958 unskilled factory workers earned four to six times the average annual earnings of agricultural laborers. In the cotton textile industry, unskilled workers earned five to seven times as much as agricultural laborers despite the fact that most jobs in cotton mills can be learned in a few days, or a few weeks at the most.
Differentials- The earning differentials were unjustified by cost-of-living differences, need for inducement to enter modern industry, cost of training and labor shortage. This real wage series increased at the average annual rate of 1.5 percent from 1949 to 1965. Increase in the wages can be profitable only if they contribute better health, motivation, and labor stability. Industrial wage differentials in 1946, before the current labor legislation was developed, were highly correlated with wage differentials in 1949, 1954, and 1958. Also productivity differentials in 1946 were found to be highly correlated with productivity differentials before the current labor legislation. Government legislation did not make much difference to the relationship between wages and productivity.
Unions: Unions are not very influential in India so their monopoly does not exist to cause any wage rigidity. Governments also do not have much influence in the wage determination in India. The union is not large enough to cause much influence. The government generally adjudicates to resolve matters. However in case of large plants unions successfully organize strikes etc. Government policies may play some part in influencing wages through the relation between wages and size, economic considerations played the greatest role. The wage-productivity relationship explains wage differentials in modern manufacturing and also the increase in real wages and the growing gap between agricultural and industrial wages in modern industry in India.
Methods of wage determination in India
Pre-independence era: No fixed mechanism of wage settlement existed.
Post-independence era: Industrial sector developed and there were enormous conflicts related to the wages causing loss of output. So the government formulated industrial policy resolution in 1948 where items which have bearing on wages were mentioned. Minimum wages were fixed and there was promotion of fair wages. In order to achieve 1st objective, the minimum wages act, 1948 was passed to lay down certain norms and procedures for determination and fixation of wages by central and state government. The second objective was fulfilled when the government of India appointed in 1949, a tripartite committee on fair wages to determine the principles on which fair wages should be fixed.
Wages and salary incomes in India are fixed through several ways. These are:
· Collective bargaining
· Industrial wage bound
· Govt. appointed pay commissions
· Adjudication by courts & tribunals
Collective Bargaining: Collective bargaining is a process of negotiation that the employers and trade unions have in order to reach an agreement regulating working conditions. These are used to decide on the wage scales, working hours, training, health and safety, overtime, grievance mechanisms and rights to participate in workplace or company affairs. It is a reflection of a social and political climate. Collective bargaining process considers the following factors in the wages determination:
The demand of the market and the choices available
The requirements of the institution
The ability and need for any rebel like strikes
Wages today are determined by collective bargaining in contrast to individual bargaining by working.
In the matter of wage bargaining, unions are primarily concerned with
General level of the wage rate
Structure of the wages rates for different occupations
Bonus, incentives and fringe benefits received
The history of the trade union movement shows that union is affiliated to one or the other political parties. As a result most of the trade unions are controlled by outsiders. Critics believe that the presence of outsiders is one of the important reasons for the failure of collective bargaining in India.
Industrial wage bound: The concept of minimum wages has existed in other countries for long. In India it came up in the 1st and 2nd five year plans. Setting of minimum wages would enable solving a number of disputes. Wage board was suggested for this purpose.
In India there are 2 types of wage boards- statutory and tripartite.
Statutory wage board is established by law and the minimum wages set are legally enforceable. This body would determine the minimum wages for different trades and industries.
Tripartite wage board is a voluntary negotiating body set up by the organization members employers and the government together for regulating the working conditions, hours etc.
Wage board decisions can always be taken into further consideration by other higher authority in case of any dispute.
Pay Commissions:
The first pay commission was appointed by the government of India in 1946 under Jus. Vardachariar. It basically enquired the conditions of service of the central government employees. The Vardachariar commission in its report mentioned that a person's pay should never be less than the wages required for his survival. The 2nd pay commission in its report submitted in 1959 examined the norms for fixing a need based minimum wage. The 3rd pay commission in its report submitted in 1970s expressed its support for a system in which pay adjustments will occurs automatically upon an upward movement in consumer price index.
The 4th pay commission in its report submitted in 1970s under Chairmanship of Jus. P.N.Singhal in 1983 examined the structure of all central govt. employees divisions, including those of union territories. It also examined the officers belonging to all India service and armed forces. Commission submits its report on July 30, 1986 and recommended drastic changes in the pay scale of employees. Certain recommendation regarding restricting of pay scales was suggested in the 5th pay commission (1952-1996). The 6th pay commission which was established on 2006 also suggested improvements on the wages and salaries of the employees. There are speculations about the 7th Pay commission which may suggest contrary recommendations like reduction in wages on account of inflation.
Adjudication: This has been instrumental in settlement of disputes, improvisation in the wages and inclusion of new features in the wage structure. Wage fixation requires crucial adjudication due to the increasing amount of tussle related to the wages and allowances. Various labor courts and high courts and even the supreme courts have adjudicated upon these disputes. The examples set by the judgments passed have helped define a structure which is considered as a standard by various industries. . Some related acts are-Minimum wages Act 1948, Payments of wages Act 1936, Equal Remuneration Act 1976, Industrial Disputes Act 1947, and Companies Act 1956.
Conclusion:
The policies implemented through the various means in the past have helped resolve various diputes and have brought stability to the wages structure in the Indian market. However the needs of the market are changing and the growing inflation and simultaneous need to develop and remain resilient to the perils to the economy seem to be a difficult task to handle. The regulations which have become redundant must be done away with. Moreover the government must ensure the implementation of legislature for improvement in both the level of employment and the production levels
