The Indian economy is dualistic characterized by the existence of a comparatively well-organized sector along with an unorganized sector with a pre-dominance of self-employment. According to the NSSO[1], Employment-Unemployment Survey of 2011-12[2], 92 percent of the workers out of the total workforce of 474.23 million are informal workers. These workers contribute to more than 60 per cent of India's GDP growth. Various studies hinted at jobless growth that had taken place in India during the late 20th and early 21st century.

While the economy grew at an annual average of 5-6 per cent the net addition to employment was only 0.2 million in 2009-10 over 2004-05 as per NSSO Employment and Unemployment Survey of 2009-10. The employment generated was mainly low skilled in the construction sector and of an informal nature.

The workforce in the informal sector has no assurance of wage protection, social security, occupational safety or employment stability not to talk of decent wage. The workforce in the informal sector has no assurance of wage protection, social security, occupational safety or employment stability not to talk of decent wage. In order to address the issue of decent job, the Government of India has been focusing on inclusive strategy in terms of skill development, social protection and labor reforms including stricter enforcement of the Minimum Wages Act, 1948.

The Minimum Wage Act,1948 derives its principle from Article 43 enshrined in the Directive Principles of the Constitution of India which mandates that "The state shall endeavor to secure, by suitable legislation or economic organization or in any other way, to all workers, agricultural, industrial or otherwise, work, a living wage, conditions of work ensuring a decent standard of life, and full enjoyment of leisure and social and cultural opportunities in particular" to ensure a fair deal to the labor class. Further, Article 39 of the Constitution of India also reinforces that the State shall, in particular, direct its policy towards securing:

• That the citizen, men and women equally shall have the right to an adequate livelihood, and
• That there is equal pay for equal work for both men and women.

The question that therefore arises is how India has brought into operation, the implementation of the abovementioned Article 39 and 43 through the prism of the Minimum wages Act, 1948. The initiative for determination of minimum wages was started in 1920 when a proposal for setting up Boards for determination of minimum wages in each industry was mooted.

ILO had also made the effort for having a minimum wage fixed for the workers in order to uplift their social and economic status along with the intent of providing the stability after the crisis of World Wars in the picture. The legislation in India was made with the intent to avoid the exploitation of the workers as when the discussion for need of determination of minimum wages was started, India was not a free country and workers were already treated badly by the employers.

India was one of the first developing countries to introduce a minimum wage policy. According to J. John (1997), the enactment of the Minimum Wages Act in 1948 was the result of both internal and external factors. Internal factors included the increase in the number of factories and wage-earners during the first half of the 20th century, as well as the growing number of industrial unrests and strikes of workers who rebelled against their - "starvation wages".

The most significant external factor was the adoption by the International Labor Organization (ILO) in 1928 of Article 1 of Convention No. 26 on minimum wage fixing in trades in which no effective collective bargaining takes place and where wages are exceptionally low. Until this day, the Minimum Wage Act of 1948 is still considered to be one of the most important pieces of labor legislation.


Figure 1- WTO Track on wage law development in India [3]

But India's system of minimum wages is also one of the most complicated in the world. The 1948 legislation determines that the: "appropriate government" should fix minimum wage rates payable to employees in a number of listed (or "scheduled") employments. This has at least three important implications:

1. Firstly, minimum wages are set by different authorities in different types of companies;
2. Secondly, the minimum wage is set only "in certain employments or occupations" and so not all wage-earners are covered: and
3. Thirdly, there exist now a large number of rates which sometimes differ widely across states, even for the same occupation.
    

Minimum Wages: An Understanding
India has a complex system of minimum wages, which are not applicable to all workers and set up often arbitrarily by different authorities, making it difficult to monitor and enforce the innumerable minimum wages.

In practice, the "appropriate government" is either the Central Government or the state governments. More specifically, the Act provides that the Central Government sets the minimum wage rate in state-owned enterprises, while state governments set minimum wages for any other type of companies. The Central Government is also responsible for setting the minimum wage in all companies operating under a railway administration or in relation to a mine, oilfield, or major port or any corporation established by the Central Government (Article 2).

The state governments and Union Territory Administration are the appropriate governments in respect of all other companies. In practice, both the Central and the state governments have appointed Advisory Boards, with the Central Advisory Board coordinating the work of all the State Advisory Boards. These Advisory Boards are usually tripartite, including representatives of government, employers and workers.

In the original Act, there were 13 scheduled employments (listed in Appendix I). These "employments" were considered as being the sectors uncovered by collective bargaining and therefore most vulnerable to unduly low wages and exploitation. However, as pointed out by Sankaran (1997), there is nothing in the Act to limit its application to any particular type of occupation or industry. In fact, the Act empowers "appropriate governments" to expand the list of "scheduled employment" if necessary.

After discussing the two important parts of decisions related to minimum wages as to who and what, the next thing which comes in mind is "what is the minimum wage rate in India?" There is no single answer to this question. Instead, there is a wide diversity in the number of different minimum wage rates that are set by different governments.

The Minimum Wage Act itself does not determine any criteria for the determination of the minimum wage and leaves the concept "undefined". However, the recommendation of two important sources are usually considered while discussing minimum wages, namely

The conclusions of the Committee on Fair Wages[4] (1949), which recommends the elements to be taken into account when setting the "level" of minimum wages, and
The decisions taken at the 15th Session of the Indian Labor Conference (1957), which defined a list of basic requirements which should be taken into account. [5] Further, the Supreme Court in the historic Raptakos Breet[6] judgment in 1992 held that in calculating the minimum wage, the need based norms laid out in the 15th Session of the Indian Labor Conference in 1957 should be considered and specified additional components.[7]

Other key points for Minimum Wages Act, 1948 to be kept in mind are that Appropriate Government may review at such intervals not exceeding five years the minimum rates of wages so fixed, and revise the minimum rates if necessary. The employer shall pay to every employee in a scheduled employment under him wages at the rate not less than the minimum rates of wages fixed under the Act. The Act also provides for regulation or working hours, overtime, weekly holidays and overtime wages. Period and payment of wages, and deductions from wages are also regulated.

Minimum Wages Act, 1948 And Its Practical Implications On Workers In Improving Their Social Status:

In 1991 the National Floor Level Minimum Wage was introduced which is only advisory. The experience of countries like USA, Canada, France, Netherlands, Japan etc. who have introduced the concept of a floor for wages, is that the number of workers getting this lowest wage varies a great deal from country to country and from year to year.

In 2005, the Government of India came up with a legislation titled the 'National Rural Employment Guarantee Act' later known as the Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) which provides for the enhancement of livelihood security of the households in rural areas of the country by providing at least 100 days of guaranteed wage employment in every financial year to every household whose adult members volunteer to do unskilled manual work. The Act also lays down the wage rate as distinct from the Minimum Wages Act, 1948 wherein Section 6 of the MNREGA says that the Central Government may by notification specify the wage rate and that different rates of wages maybe specified for different areas and the wages rate fixed at any time shall not be less than Rs.100 per day. Anything higher than this shall be met by the State Governments.

The Parliamentary Standing Committee on Labor that examined the Ministry of Labor's Demand for Grants for 2012-13 recommended that the criteria for fixation of minimum wages should be defined in the Act. And also a concept of "Fair Wages" should be simultaneously evolved and it must be ensured that the contract/casual/outsourced workers engaged by the profit earning PSUs/ organizations /autonomous bodies are paid fair wages.

Now, the Code on Wages, 2019 ("Code"), which was enacted on August 8, 2019, will become effective from the date to be notified by the Central Government. The Government aims to implement the Code, along with the other three labor codes, by year end or early next year. The draft rules under the Code ("Rules") were published on July 7, 2020 to seek public feedback.

The Code will consolidate four Central labor enactments on wages, viz. the Payment of Wages Act, 1936, the Minimum Wages Act, 1948, the Payment of Bonus Act, 1965 ("Bonus Act"), and the Equal Remuneration Act, 1976. As its title suggests, it incorporates all the essential elements related to wages and, to an extent, even regulates the wages of highly remunerated, managerial, and supervisory employees. [8]

Although the Code has not come into effect due to COVID-19 crisis in the country, it is expected to increase the living standards of the working labors along with resolving some major confusions in the labor law field.

Conclusion
The issue of fixation of minimum wages is of primary importance in a country like India where 300 million people are employed in the informal sector with no collective bargaining power. This is 93 percent of the workers. The enactment of the Minimum Wages Act in 1948 is a landmark in the labor history of India. While the minimum wages help the workers to attain a sustainable life with dignity, the goal set in the directive principles of state policy of India is to achieve living wage system in India and for which India has a long way to cross.

End Notes:

1. NSSO - National Sample Survey Organization
2. Calculated using unit level data of NSSO
3. https://www.ilo.org/wcmsp5/groups/public/---asia/---ro-bangkok/---sro-new_delhi/documents/publication/wcms_638305.pdf PG. No. 76
4. The Committee on Fair Wages clearly specified that - a minimum wage must provide not merely for the bare subsistence of life but for the preservation of the efficiency of the worker. For this purpose, the minimum wage should also provide for some measure of education, medical requirements, and amenities‖ (John, 1997, p. 8).
5. The 15th Indian Labor Conference (a tripartite body comprising representation of governments, employers and labor) laid down the norms for setting up minimum wages, which included three consumption units per worker: minimum food requirements of 2,700 calories per day per consumption unit; cloth requirement of 72 yards per annum per family; rent allowance which is equivalent to the government's industrial housing scheme. Fuel, lighting and miscellaneous items constitute 20 per cent of the minimum wage.
6. Workmen v. Reptakos Breet & Co. Ltd. 1992 1 LLJ 340, AIR 1992 SC 504
7. The additional components constituted children's education and medical recreation, including festivals, ceremonies, provision for old age and marriage.
8. https://www.mondaq.com/india/employee-rights-labour-relations/994852/impact-of-code-on-wages-2019-on-the-private-sector