Methods of Wage Determination in India

1. Fixation of wages is a recent phenomenon in India

2. There was no effective machinery until 2
nd
world war for settlement of disputes
for fixation of wages.
3. After independence of India, industrial relations ecome a ma!or issue and there
was phenomena increase in industrial dispute mostly over wages leading to
sustantial loss of production.
". #eali$ing that industrial peace is essential for progress on industrial as well as
economic front, the central govt. convened in 1%"&, and a tripartite conference
consisting of representatives of employers, laour and government.
'ovt. of India formulated industrial policy resolution in 1%"( where the govt. has
mentioned to items which has earing on wages
statutory fixation of minimum wages
)romotion of fair wages.
*. To achieve 1
st
o!ective, the minimum wages act, 1%"( was passed to lay down
certain norms and procedures for determination and fixation of wages y central
and state govt.
+. To achieve 2
nd
o!ective govt. of India appointed in 1%"%, a tripartite committee
on fair wages to determine the principles on which fair wages should e fixed
,ages and salary incomes in India are fixed through several institutions. These are

-ollective argaining
Industrial wage ound
'ovt. appointed pay commissions
Ad!udication y courts . triunals
1. COLLECTIVE BARGAINING!
-ollective argaining relates to those arrangements under which wages
and conditions of employments are generally decided y agreements
negotiated etween the parties.
/roadly spea0ing the following factors affect the wage determination y
collective argaining process
Alternate choices . demands
Institutional necessities
The right and capacity to stri0e
In a modern democratic society wages are determined y collective
argaining in contrast to individual argaining y wor0ing.
In the matter of wage argaining, unions are primarily concerned with
'eneral level of wage rates
1tructure of wages rates 2differential among occupations3
/onus, incentives and fringe enefits, Administration of wages.
". IND#$TRIAL WAGE BOARD$!
-oncept of wage oard was first enunciated y committee on fair wages.
It was commended y first five year plan and second five year plan also
considered wage oard as an acceptale machinery for setting wage
disputes.
,age oards in India are of two types
$tat%tor& 'age (oard
Tri)artite 'age (oard
1tatutory wage oard means a ody set up y law or with legal authority
to estalish minimum wages and other standards of employment which are
then legally enforceale in particular trade or industry to which oard4s
decision relate.
Tripartite wage oard means a voluntary negotiating ody set up y
discussions etween organi$ed employers, wor0ers and govt. to regulate
wages, wor0ing hours and related conditions of employment.
,age oard decisions are not final and are su!ected to either executive or
!udicious review or reconsideration y other authority or triunals.
The powers and procedure of wage oards are same as those industrial
triunals unsaturated under I5 Act 1%"&.
*. +A, COMMI$$ION$!
First pay commission was appointed y govt. of India in 1%"+ under
chairmanship of !ustice vardachariar to en6uire in to conditions of service
of central govt. employees.
The vardachariar commission in its report said that in no case should a
mans pay less than living wage
The 2
nd
pay commission was appointed in aug. 1%*&. and commission
sumits its report in 1%*%, examined the norms for fixing a need ased
minimum wage set up 1*
th
session of I7-.
'ovt. of India appointed third pay commissions in 1%&84s which sumit its
report in April 1%&3. In this report commission express its support for a
system in which pay ad!ustments will occurs automatically upon an
upward movement in consumer price index.
After thirteen years, govt, appointed fourth central pay cimmissions under
chairmanship of !ustice ).9.1inghal on :uly 2+, 1%(3 to examine structure
of all central govt. employees, including those of union territories.
;fficers elong to all India service and armed forces. -ommission sumits
its report on :uly 38, 1%(+ and recommended drastic changes in pay scale.
The *
th
pay commission 21%*2<1%%+3 made certain recommendation
regarding restricting of pay scales.
The +
th
pay commissions was estalished on 288+ and committee sumit
its report on =arch 288(.
*. Ad-%di.ation
1ince independence ad!udication has een one of the main instruments for
settlement of disputes, improvement in wage scales and standardi$ation of wages and
allowances. Though courts and triunals were primarily intended to deal with settlement
of industrial disputes, in practiae, wage fixation has ecome an important element in their
wor0 and functioning. This is ecause of large of disputes concerning of wages and
allowances. 9umerous wage disputes in many industries have een referred for
ad!udication to laour courts and triunals during past ten decades. The high courts and
1upreme -ourt have also ad!udicated upon such disputes. The awards given y these
authorities not only helped in formulation of a ody of principles governing wage
fixation ut laid foundation for present wage structure in many of ma!or industries. 1ome
ma!or legislation which governs the principles of wage fixation <Minim%m 'ages A.t
1/012 +a&ments of 'ages A.t 1/*32 E4%a5 Rem%neration A.t 1/632 Ind%stria5
Dis)%tes A.t 1/06, and Com)anies A.t 1/73.