Wage and Salary Administration

Wage Concepts:
The committee on Fair Wages (1948) and The 15th session of The Indian Labour Conference (1957) put forward certain Wage Concepts:

The committee on Fair Wages (1948) defined-

1. Minimum Wage
2. Living Wage
3. Fair Wage

15th session of The Indian Labour Conference (1957) defined-
4. Need-based minimum Wage

1. Minimum Wage:
A minimum wage must provide not merely for the bare sustenance of life but for the preservation of the efficiency of the worker by providing some measure of education, medical requirements and amenities.

2. Living Wage:
It represents a standard of living which is provided not merely for a bare physical sustenance but decency, protection against ill-health, requirements of essential social needs and some insurance against the more important misfortunes including old age.

3. Fair Wage:

• While the lower limit of the fair wage obviously be the minimum wage, the uper limit is equally set by what may broadly be called the capacity of industry to pay. Between these two limits the actual wage would depend on
• The Productivity of Labour
• The prevailing rates of wages
• The level of national income and distribution
• The place of the industry in the economy of the country.

4. Need-based Minimum Wage:

• The minimum wage should be need-based and “should ensure the minimum human needs of the industrial worker, irrespective of any other consideration.”
• The basis for calculating Need-based minimum wage is as follows:

a) The standard working-class family taken to consist of 3 consumption units for one earner; earnings of women, children and adolescents should be disregarded.
b) Minimum food requirements-net intake of 2700 calories for an average indian Adult.
c) Clothing requirements- 18 yards per annum (Average worker’s family of 4 = 72 yards/annum).
d) Housing- minimum rent charged by govt.in any area for houses provided under subsidized industrial housing scheme for low-income group.
e) Fuel, Lighting & other miscellaneous items- 20% of total minimum wage.

• The minimum wages Act, 1948 did not define the minimum wage.
• Courts and employers go by the definition given by the committee on fair wages while the trade unions would like to consider the need-based minimum wage concept.
• The Pay Commissions appointed by govt. did not accept the need-based minimum wage formula because of budgetary implications, unemployment and low wage levels in agriculture etc.

Legal Frame Work:
The legal frame work for the payment of  wages/salaries is governed by mainly for legislation besides the guidelines for managerial remuneration:

• The payment of wages Act, 1948
• The Minimum Wages Act, 1948
• The Payment of Bonus Act, 1965
• The Equal Remuneration Act, 1976