Observation (CEACR) - adopted 2006, published 96th ILC session (2007)

The Committee notes the information provided by the Government in reply to its previous observation. Concerning the extension of the application of the Minimum Wages Act, 1948, to cover home workers, the Committee notes that the State of Karnataka is at present the only state government which has included home workers in scheduled employment and accordingly fixes minimum wage rates for those workers. Noting that minimum wages are currently fixed by the central and state governments for a total of 1,568 scheduled employments, the Committee requests the Government to continue to provide up to date information on any new categories of workers, including home workers, coming under the scope of the Minimum Wages Act. As regards the ongoing process of a comprehensive amendment of the Minimum Wages Act, the Committee notes that various proposals have been examined by the Central Advisory Board and also discussed at other forums, such as the 2005 session of the Indian Labour Conference. Recalling that, as previously reported by the Government, certain modifications are explored with a view to rendering the provisions of the Minimum Wages Act more stringent, the Committee asks the Government to keep it informed of any progress made in this regard.

1. Introduction of a national “floor-level” wage applicable to all workers. The Committee notes the explanations provided by the Government on the establishment of the national floor-level minimum wage (NFLMW) and its legal status. The NFLMW was initially fixed in 1996 at Rs.35 per day (approximately US$0.75) based on the recommendation of the National Commission on Rural Labour, and was last raised in 2004 to Rs.66 per day (approximately US$1.42) upon the recommendation of the tripartite Central Advisory Board. The NFLMW is a non-statutory measure, persuasive in nature that the state governments are requested to consider as a threshold below which no minimum pay rates should fall. The Committee notes, however, that, according to the statistical data annexed to the Government’s report, 15 among the 35 states/union territories apply sub-NFLMW minimum rates, in some cases as low as Rs.44 per day. Recalling that the ultimate objective of a minimum wage system is to guarantee a decent standard of living for low-paid workers and their families, the Committee asks the Government to indicate whether the national floor-level minimum wage is currently situated above the poverty threshold and also whether any steps have been taken or are envisaged for its revision. Moreover, the Committee would appreciate receiving the Government’s explanations as to the means at its disposal for promoting compliance with the NFLMW among states and union territories applying significantly lower minimum wage rates.

In addition, the Committee understands that the Government has given consideration to establishing a uniform Rs.60 minimum wage rate for agricultural workers in all states under the recently introduced National Rural Employment Guarantee Scheme. The Committee asks the Government to provide additional information on this initiative, especially as regards the method used for fixing the level of the uniform minimum wage and the content of any consultations that may have taken place to this effect.

2. The operation of the minimum wage fixing machinery. The Committee notes the Government’s indication that, when fixing or revising minimum wages by notification, state governments are bound to consult an advisory board which consists of an equal number of employers’ and workers’ representatives, as set out in sections 5, 7 and 9 of the Minimum Wages Act, 1948. It also notes the information according to which the Central Advisory Board meets frequently, last in June 2005, while the Minimum Wage Advisory Board in the central sphere held its last meetings in July 2004 and May 2005. The Committee would be grateful if the Government would specify in its next report: (i) the state governments/union territories which fix or revise minimum wages by means of consultation and notification respectively; (ii) whether advisory boards are established and active in all states/union territories without exception; (iii) any practical difficulties experienced in the operation of the minimum wage fixing machinery, especially with regard to the periodicity of the revision of minimum wage rates and the participation of employers’ and workers’ organizations in that process.

3. Enforcement of minimum wages. The Committee notes the Government’s indications concerning the powers of labour inspectors in matters of minimum wages, as provided for in section 19 of the Minimum Wages Act. It also notes the statistical information regarding inspection results in different states/union territories for the period 2002-05. The Committee asks the Government to continue to provide detailed information on all measures aiming at enhancing the enforcement of the minimum wage legislation, such as the reinforcement of the labour inspection services, the introduction of stricter and truly dissuasive sanctions, accelerated proceedings for the rapid recovery of underpaid wages, etc. In this connection, the Committee refers to its latest observation made under Convention No. 81, in particular the need for penalties to be fixed at a sufficiently high level and be periodically reviewed and also the importance of gradually improving the human and material resources of the labour inspectorate.

4. Observations by the Centre of Indian Trade Unions. The Committee notes the detailed comments of the Centre of Indian Trade Unions (CITU), dated 26 May 2006, regarding the procedure for elaborating the consumer price index which is used for the fixation and revision of minimum wages. According to the CITU, the Government has unilaterally introduced a new series of the consumer price index for industrial workers despite repeated joint communications of all the central trade unions organizations opposing such initiative. The trade union organization considers that the index figures released by the Labour Bureau fail to correctly reflect the inflation or price rise at the ground level due to manipulations in price collection and compilation process and as a result workers have lost faith in the price index machinery. In this connection, it denounces a number of irregularities observed in the price collection process which render the entire mechanism non-transparent and fraudulent. Referring to the two Index Review Committees, which had been appointed in 1978 and 1980, and which had recommended wider participation of the social partners in the different stages of the compilation of consumer price index numbers, the CITU regrets that several recommendations of those bodies have not yet been implemented. It is indicative that the Labour Bureau has completed the recent exercise of updating the consumer price index without holding any nationwide consultation except for the National Level Index Users’ Meeting of May 2005 in which the representatives of all the central trade union organizations demanded that all substantive issues connected with updating the consumer price index, such as the selection of the base year, conduct of family income and expenditure surveys, methodology of index compilation, selection of centres, methods of sampling, agencies for carrying out the surveys, etc., should be thoroughly deliberated. The CITU concludes that the Government should appoint a consumer price index review committee, as requested by all central trade unions, and take the necessary steps to rectify the malpractices prevalent in the present price compilation process.

The Committee recalls that, in accordance with the letter and the spirit of the Convention, the representatives of the employers and workers concerned should be associated at all stages of the operation of the minimum wage fixing machinery, and therefore should be fully consulted also with regard to the collection of data and the carrying out of studies directly related to the determination of minimum wage levels. The Committee would appreciate receiving the Government’s reply to the comments of the CITU in respect of the revision of the consumer price index.