The ILO Convention No.

26 (Wage Fixing Machinery Convention, 1928) provides for fixing of

minimum wages in manufacturing and commercial trades or parts of trades where no
arrangements exist for the effective regulation of wages and where wages are exceptionally low.
Convention 131 of the ILO (Minimum Wage Fixing Convention) adopted in 1970 requires that
every member of the ILO which ratifies the convention should undertake to establish a system of
minimum wages which covers all groups of wage earners whose terms of employment are such
that coverage would be appropriate2.
Policies concerning labour wages and their employment, in both organized and unorganized
sectors in India, have been a subject of contention among union leaders and labour experts.
Establishment of proper and effective machinery for wage fixation has always been an intricate
problem. It is, however, felt more in unorganized industries where working conditions are worse
due to the weak bargaining position of the workers3.
Till 1948 there was no such machinery to regulate minimum wage thereby making the
exploitation of workers common. They were paid exceptionally low wages. Besides, in
unorganised industries, there was disparity in wages for work of similar kind. Apparently with
emphasis on welfare aspect, the State had to intervene. India's commitment to payment of
minimum wages resulted in the enactment of the Minimum Wages Act in 1948 to provide for the
fixation and revision of minimum rates of wages for scheduled employment by the government4.
The Indian economy has dual characteristics. A comparatively well organised sector exists along
with the larger decentralised and unorganised/informal sector with a large self-employed
1 D.V. Giri and B.R Ra, “THE MINIMUM WAGES ACT: A STUDY OF ITS WORKING IN ORISSA” 33 Indian
Journal of Industrial Relations464 (1998).
2 Ibid.
3 Suresh C. Srivastava, “Machinery for Fixation of Minimum Wage of Sweated Labour in India: Problems and
Prospects” 23 JOURNAL OF THE INDIAN LAW INSTITUTE 495 (1981).
4 Ibid.
45
population. These workers of unorganized sector contribute a lion’s share in India’s GDP
growth. While the Minimum Wages Act has been effectively protecting the workers in the
organised sector, this has not been the case for the workers in unorganised sectors, who remain
outside its domain.
The term 'Labour' is included in the 'concurrent list' of the Constitution which means both the
central and the state governments can legislate on it. The state governments enforce Labour laws
for most workers in the informal sector, while the central Government regulates law for
contractors and casual workers in establishments. All central labour laws influence wage level
and structure of wages in the informal sector.
Table 1: Labour legislations influencing wages in the informal sector in India5
Labour legislation
Type of intervention
The Minimum Wages Act,
1948
To provide minimum compensation for work. Workers in
scheduled employment to be paid minimum wage.
The Trade Unions Act, 1926
To enable workers of a number of small units to form
unions, who can bargain wages and other condition of
work.
The Industrial Disputes Act,
1947
To enable unions to raise industrial disputes on wages and
the conciliation machinery to intervene.
The Equal Remunerations
Act, 1976
Assure equal wage to women for same or similar work.
5 K.S. Das, “Wage policy issues in the informal sector” 41 The Indian Journal of Labour Economics 896 (1988).6
The Payment of Wages Act,
1936
To regulate the manner of payment of wages and their
realisation in case of non-payment.
The Contract Labours
(Regulation and Abolition)
Act, 1970
The contractor is required to pay wages and in case of
failure on the part of the contractor to pay wages either in
part or in full, the Principal Employer is liable to pay the
same.
Minimum Wages Act, 1948 is the foremost and most important for the workers in unorganized
sector. In India, the policy on wage determination centers on fixing minimum wages in
employments and to promote fair wage agreements in the more organised industries. Wages in
the organised sector are determined through employer-employees negotiations and settlements.
In unorganised sector, however, where illiteracy makes labour more vulnerable to exploitation
and weakens his bargaining power, the government interventions are necessary.
The Minimum Wage Act, 1948 provides for fixation and enforcement of minimum wages in
respect of schedule employments to prevent exploitation due to low wages. Its objective is to
ensure a minimum subsistence wage for workers. The Act requires the government to fix
minimum wage rates for employment specified in its schedule. Besides it requires the
Government to review and revise the minimum rates of wages within five years intervals. Once a
minimum wage is fixed according to the Act’s provisions, the employer cannot plead his
inability to pay the said wages to his employees.
The minimum wage rate may be fixed at time rate, piece rate, guaranteed time rate and overtime
rate. The Act provides that different minimum wage rate may be fixed for different scheduled
employments, different works in the same employment, adult, adolescent and children, different
locations or male and female. Also, such minimum wage may be fixed by an hour, day, month,
or any other period as may be prescribed by the notified authority.
This assignment highlights the issues and concerns relating to fixation and revision of Minimum
Wages in India. An attempt has been made to simplify the p