Wage Policy

MEANING
 Wage policy is complex and sensitive area of public

policy.
 Status of worker in society, commitment, attitude,
morale, motivation, their living standard are all
conditioned by wage
 Wage policy has to be pragmatic
Definition
 ILO defined wage policy as “ 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”.
Objective of Wage Policy
 To abolish malpractices and abuses in wage payment.
 To set minimum wage for workers whose bargaining
position is weak.
 To bring about efficient allocation and utilisation of
manpower through wage differential and appropriate
system of payment.
Need for Wage Policy
 To guarantee certain minimum living wage to the
worker.
 Elimination of exceptionally low wage.
 Reduction in wage differentials
 Protection of real wage
 Improve productivity.
Wage Policy in India
(Pre-Independence).....Contd
 GOI attitude to labour problems was that of least interference.
 Organised labour movement and nationalised movement, the
govt began to take positive interest in labour matters.
 The Whitley commission, for the first time recommended the
setting up of a machinery for the fixation of minimum wages.
 The central legislative assembly also passed a resolution in the
matter in 1938.
 The second world war cause a phenomenal rise in prices. Indian
labour conference (1943) and standing labour committee (1944)
discuss the problem of minimum wage fixation to neutralise the
price rise.
 System DA and Bonus was also initiated during the war
(Pre-Independence)
 In 1946, the government formulated three-fold wage policy
which recommended
a. Statutory prescription of minimum wages in sweated
industries and in agriculture.
b. Promotion of fair wage agreement
c. Steps to secure for workers in plantations a living wage
(Post-Independence)
 Soon after independence, the government embarked upon a
series of legislative and pathetic measures for improving pathetic
condition of the working class.
 Adjudication machinery was incorporated in the Industrial
Dispute Act 1947.
 In India, evolution of wage policy started with the Industrial
Truce Resolution unanimously adopted in a tripartite conference
in December, 1947.
 The passing of Minimum Wage Act 1948, appointment of the
Fair Wage Committee (1948)
 The principle of equal pay for equal work for both men and
women has also been laid down as one of the directive principles
of state policy in Article 39 of the constitution
Policy Enunciated in the
Plans...Contd
 The First Five Year Plan (1951-56)
 It advocate wage increases for removing anomalies or where the
existing rates are abnormally low
 Wage in public sector should not be less favourable than those
prevailing in private enterprises.
 Permanente wage board with tripartite composition should be
set up.
 Laying down norms and standard for the determination of wage
and bonus.
 Standardisation of wage
 Scientific assessment of work
 Full and effective implementation of minimum wage.
Plans...Contd
 The Second Five Year Plan (1956-61)
 Setting up of special wage commission
 The Third Five Year Plan (1961-66)
 Didn’t offer anything specific to wage policy
 The Fourth Five Year Plan (1969-74)
 The price stability is the basic to wage policy
 The need for wage increase with increase in productivity
 The necessity to extend the system of payment by
agreement
Plans...Contd
 The Fifth Five Year Plan (1974-79)
 The reward structure of the industrial employees in
term of wage and non-wage benefits must be related to
performance records in industrial enterprise.
 The Sixth Five Year Plan (1980-85)
 Narrow down the inequalities
 Eliminate malpractices in regards to wage rate and wage
payment
 To lay down criteria for fixation and revision of wage
 To raise the level of minimum wage
 To extend the system of productivity linked bonus
Policy Enunciated in the Plans
 The Seventh Five Year Plan (1985-90)
 The Eight Five Year Plan (1992-97)
 Ninth Five Year Plan (1997-2002)
 All talked about increase in productivity, improvement
in skills, reduction in disparities, worker education,
social security benefits, rehabilitation of bonded labour,
law related to labourer of unorganised sector etc..
Recommendations on Wage Policy
 February 1973, Committee on wage policy, under the
chairmanship of S. Chakraborty
 Scope restricted to private sector of the country
 Bhoothalingam Panel, 1978 Proposed the concept of
national minimum wage
 Arjun Sengupta Committee submitted its report on
wage policy in the public sector in 1984
 Wage structure should be determine based on industry
and region
 Wage commission/Wage Boards
 Wage plus component linked with productivity
National Wage Policy
 A national minimum floor independent of capacity of
industry to pay
 The concept of capacity of industry to pay for arriving
at a wage level above minimum floor
 Instrumentality of dearness allowance to protect the
purchasing power
 Profit sharing subject to availability of reallocable
surplus
 The linking of increase in wage to the increase in
production

Wage Policy

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MEANING

 Wage policy is complex and sensitive area of public

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