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12 Main Objectives of

National Wage Policy in

India Explained!
Article shared by Vignesh Rajshekar
Main objectives of national wage policy in India are discussed below:
One of the objectives of economic planning is the raising of the standard of living of
the people. This means that the benefits of planned economic development should
be distributed among the different sections of the society.
Therefore, in achieving a socialistic pattern of society, the needs for proper rewards
to the working class of the countryman never is over emphasised.
A national wage policy, thus aims at establishing wages at the highest possible level,
which the economic conditions of the country permit and ensuring that the wage
earner gets a fair share of the increased prosperity of the country as a whole
resulting from the economic development.

The term wage policy here refers to legislation or government action calculated to
affect the level or structure of wages or both, for the purpose of attaining specific
objectives of social and economic policy.

1. To eliminate malpractices in the payment of wages.

2. To set minimum wages for workers, whose bargaining position is weak due to the
fact that they are either un-organised or inefficiently organised. In other words, to
reduce wage differential between the organised and unorganised sectors.
3. To rationalise inter-occupational, inter-industrial and inter-regional wage
differentials in such a way that disparities are reduced in a phased manner.
4. To ensure reduction of disparities of wages and salaries between the private
sector and public sector in a phased manner.
5. To compensate workers for the raise in the cost of living in such a manner that in
the process, the ratio of disparity between the highest paid and the lowest paid
worker is reduced.
6. To provide for the promotion and growth of trade unions and collective bargaining.
7. To obtain for the workers a just share in the fruits of economic development.
8. To avoid following a policy of high wages to such an extent that it results in
substitution of capital for labour thereby reducing employment.
9. To prevent high profitability units with better capacity to pay a level of wages far in
excess of the prevailing level of wages in other sectors.
10.To permit bilateral collective bargaining within national framework so that high
wage islands are not created.
11.To encourage the development of incentive systems of payment with a view to
raising productivity and the real wages of workers.
12.To bring about a more efficient allocation and utilisation of man-power through
wage differentials and appropriate systems of payments. In order to achieve the
above objectives under the national wage policy, the following regulations have been
adopted by the state:
1. Prescribing minimum rates of wages.
2. Compulsory conciliation and arbitration.

3. Wage boards.

1. Minimum Wages:
In order to prescribe the minimum rate of wages, the Minimum Wages Act, 1948 was
passed. The Act empowers the government to fix minimum rates of wages in respect
of certain sweated and unorganised employments. It also provides for the review of
these wages at intervals not exceeding 5 years.

2. Compulsory Conciliation and Arbitration:

With the object of providing for conciliation and arbitration, the Industrial Disputes Act
1947 was passed. It provides for the appointment of Industrial Tribunals and National
Industrial Tribunals for settlement of industrial disputes including those relating to

3. Wage Boards:
A wage board is a tripartite body with representatives of management and workers,
presided over by a government nominated chairman who can act as an umpire in the
event of disagreement among the parties.
Technically, a wage board can make only recommendations, since there is no legal
sanction for it, but for all practical purposes, they are awards which if made
unanimously, are considered binding upon employers.