Fair Wage: Meaning and Concept

FAIR WAGE
MEANING AND CONCEPT

Origin of wage
 Wage is a reward for the services rendered or
remuneration for the work done and it is as old as
the society itself.
 In the primitive days, wages were paid in kind, most
common of them was grains and the food.
 But with the advent of industrialisation wages form a
complex problem and in almost all industrialised
countries it became a sensitive area of public policy.
 Very soon the quantum of wages assumed a
common cause of friction between the employers
and the wage-earners.
 Frequent disputes between employer and wage-
earners resulted in strikes over the demand for
wage-increase.
 The determination of adequate wages that should be
justifiably payable to die workmen by the employer,
was not merely an economic problem but a
multidimensional phenomena, necessarily involving
relevant factors like place ot industry, prices of the
product, living standards, basic needs of die wage-
earner and the governmental policy in a given society.
 The natural instinct of the employer to keep the wage-
bill to a minimum and workers struggle to secure a
wage-increase to meet both ends, created a chaotic
situation which demanded an immediate State’s
intervention to protect the weaker section of the
society, namely, workers, in view of its low bargaining
capacity.
 In the Indian context, soon after the independence,
Government of India set up a Committee on Fair
Wages in 1948 which has defined various concepts
of wages which govern the wage structure in the
country specially in those sectors which can be
termed as underpaid and where workers do not
have bargaining power through unions.
 These concepts are: minimum wage, living wage,
and fair wage.

 Later, the concept of need-based minimum wage
was added.
Fair Wage
 The concept of fair wage is linked with the capacity of
the industry to pay.
 The Committee has defined fair wage as follows:
 “Fair wage is the wage which is above the minimum wage
but below the living wage.

 The lower limit of the fair wage is obviously the
minimum wage: the upper limit is to be set by the

capacity of the industry to pay. “
 Thus, fair wage depends on different variables affecting
wage determination.
 Such factors are labour productivity prevailing wage
rates, the level of national income and its distribution

and the capacity of industry to pay.
 At present, the concept of fair wages is followed by the
most business organisations.
 The Fair wage principal is for fixing the minimum
wage with reference to the prevailing rates of
wages in the particular trade or industry.
 Under the fair wage principal three things are
required i.e. standardization of wages within the

industry, uniformity of wages in all occupation in
an area and fair margins between the wages of
unskilled, semiskilled and skilled worker.
 The lower limit of fair wage is the minimum wage,
while the upper limit is living wage. It is the one

which is sufficient to cover the bare physical needs
of a worker and his family.
 It appears that the minimum wages is the wages
which not only fulfilled physical needs of worker

which keep him just above the starvation but also
ensure subsistence of his family along with them.
 The Fair wage principal is for fixing the minimum wage with
reference to the prevailing rates of wages in the particular
trade or industry.
 Under the fair wage principal three things are required i.e.
standardization of wages within the industry, uniformity of
wages in all occupation in an area and fair margins between
the wages of unskilled, semiskilled and skilled worker.
 According to Conventions No's 131 and 95, and other ILO
instruments observed the minimum wage and living wage can
be seen as components of the broader concept of fair wages.
 International Labour Conference has been identified 12
dimensions of the concept of fair wages.
 The wages must be paid regularly and in full to the workers;
they must comply with the minimum wage regulations and at
least correspond to the living wage; they should not require
excessive working hours; they must lead to a balanced wage
structure; free of discrimination; take into account different
levels of education, skills and professional experience and
reward individual and collective performance
 Fair Wage, Living Wage and Minimum Wage principle in India:
 In India the enactment of Trade Dispute Act 1929 and the
appointment of Royal Commission on Labour were two important
landmarks in the evolution of labour policy with reference to wages.
 This commission, for the first time, recommended the setting up of
machinery for fixation of minimum wages in keeping with certain
requirement so as to avoid sweating in Indian industries the uniform
minimum wages is not possible for all industries on account of
different and varying condition, therefore in various time minimum
wages decided by judiciary in terms of capacity to pay principal and
living wage and fair wage concept in context with minimum wage
principle.
 The various times the Supreme Court and High Court elaborate the
concept of minimum wage in terms of living wage and fair wage by
evaluating the concept of International norms, ILO's guidelines, Five
Year Plan and Indian Labour Conference & Wage Commission
Report.
 These principles under various cases helpful the Government, Wage
commission for framing sound minimum wage policy and effective
poverty alleviation programme in India.
 In All India Reserve Bank Employees Vs Reserve
Bank of India Ltd.18 the Supreme Court defined
fair wage as, “a Fair wage is thus related to fair
workload and the earning capacity. It is a step
lower than the living wage.”
 The Supreme Court observed that, “the need based
minimum wage as formulated by the Indian Labour

Conference, was ideal to be pursued and deserve
respect”.
 In Hindustan Times Limited Vs Their workmen19,
the Supreme Court says that Fair wage is roughly

said to be approximate to the need based
minimum, in the sense of the wage which is
adequate to cover the normal needs of the average
employee regarded as a human being in a civilized
society.”
 In Shivraj Fine Arts Litho Works Vs State Industrial
Court20, the Supreme Court upheld that “a fair wage is
a mean between the living wage and the minimum
wage.
 Wages must be fair, that is to say, sufficiently high to
provide a standard family with food, shelter, clothing,
medical care and education of children appropriate to
the workmen but not at the rate exceeding its wage
earning capacity in the class or establishment to which
he belongs
 In Express Newspaper Ltd. Vs Union of India21, The
Supreme Court further held that, “the fair wage is a
mean between the living wage and the minimum
wage.” The lower limit of the fair wage is above the
minimum wage, whereas the upper limits below the
living wage. The limit of the fair wage depends upon
the 'capacity' of industry to pay.
 https://apps.il-work-net.com/ArticleViewer/Article
/Index/51/%
7Blink%7D
 https://yearbook.robecosam.com/articles/fair-wag
es-a-key-to-effective-social-capital-management
/
 https://www.mbaknol.com/human-resource-mana
gement/concepts-of-minimum-wage-fair-wage-a
nd-living-wage/

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FAIR WAGE

MEANING AND CONCEPT

and fair wage.

but below the living wage.

minimum wage: the upper limit is to be set by the

rates, the level of national income and its distribution

required i.e. standardization of wages within the

while the upper limit is living wage. It is the one

which not only fulfilled physical needs of worker

minimum wage as formulated by the Indian Labour

the Supreme Court says that Fair wage is roughly

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