Minimum wages have minimum impact on workers

Capstone City Economy Karnataka Uncategorized

The unskilled workforce is forced to work under inadequate wages with no hope of increments

Fayaz Pasha, a worker in an electrical shop located in Bengaluru’s Banashankari, goes to work every day from Monday to Saturday. He works round the clock in a 12-hour shift. He lives with his 3-year-old daughter and a sister, in a one-bedroom accommodation, a flat that is divided by a wall to separate the bedroom and rest of the rooms (living room and kitchen). The accommodation costs him Rs. 4000 a month. At the end of the month, he receives a pay check of Rs. 8000, half of which is spent on house rent. “With just Rs. 8000 as my salary, I am not able to run my household. It gets very difficult to get through a month with electricity, gas and water bills skyrocketing,” said Pasha who hails from a small town called Bagepalli in Karnataka. Fayaz is among the many unskilled workers in Bengaluru who fall under the ambit of Minimum Wages but are kept in the dark about their rights.

Fayaz’s father came to Bengaluru in search of a job and hoped to lead a decent livelihood with his family. Fayaz couldn’t study beyond 10th standard as his father couldn’t afford his education any further. Now, a generation later, he fears that he might not be able to provide education to his own daughter. He wants to admit his daughter in a private, English-medium school as he believes that government schooling is not adequate and that in order to help his daughter move out of poverty, he has to send her to a private school.

The history of Minimum wages goes back to the 19th century when New Zealand became the first country to implement such a rule. Initially, minimum wages were only applied to a few categories of workers, i.e., those who were especially vulnerable like women and children. Soon after the second World War, the scope of minimum wages expanded to newly independent countries like India and Pakistan. Before this, minimum wages were not mandated by the legislation. It was only when workers from all over the world demanded that they required protection against low wages written down as a right did minimum wages become legal in most countries.

The concept of ‘Minimum Wages’ is unknown to most workers in Bengaluru. According to the Karnataka Minimum Wages Rules, 1958 and The Code of Wages Karnataka Draft Rules, 2021, unskilled workers are supposed to get minimum wages fixed by the government. According to Minimum Rates of Wages for the year 2021-22 as per Labour Commissioner Office, Government of Karnataka, unskilled employees are supposed to earn Rs. 511 per day and Rs. 13,311 per month. Despite the existence of such an act, most unskilled workers have to live under conditions wherein their salaries are extremely low as compared to what the government has fixed.

In India, the practice of providing minimum wages to workers was influenced by Britishers before it was made a law in 1946. Article 46 of the Indian constitution guarantees that the state will create an economic order that provides employment to every citizen and that everyone receives ‘fair wages.’ The purpose behind the promulgation of minimum wages as a law was to preserve purchasing power among workers, remove unfair competition among different levels of workers, reduce poverty and promote equal pay among all. In the same year, a Fair Wages Committee was set up to dictate the policy for fare wages. Based on the committee’s findings, it defined three levels of wages: 1) Living wage 2) Fair wage and 3) Minimum wage.

LIVING WAGEo   Described as a level of income that can provide an individual and his/her family with adequate standards of living.
o   Prevents families to fall into poverty.
According to economists, no more than 30% of one’s living wage should not be spent on housing.
FAIR WAGEo   Described as a level of income which is greater than minimum wages.
o   The lower limit of fair wages should be equal to minimum wages.
A fair wage is paid for the type of work that has been done.
MINIMUM WAGEo   Described as the lowest wage that must be paid to a worker as mandated by the law.
o   States set their own minimum wages based on their respective industry standards.
Minimum wages are reviewed in accordance with inflation and changes in costs of standards of living.
Source: Investopedia, Legal Service India

While workers say that they are underpaid, shop owners claim that they remunerate their employees adequately, sometimes even more than the basic pay as fixed by the Minimum Wages Act. Sheikh Sana who owns ‘Royal Woodworks’ in Banashankari, has hired four workers at his shop, that has been operational for 30 years now. He said that he pays Rs. 750 per day to each worker. That is the basic amount for any unskilled worker who seeks employment at his shop. Moving forward, if he thinks a worker has excelled his skills as a labourer, he would consider increasing his salary to Rs. 1000 per day. By this logic, any worker at Royal Woodworks would earn Rs. 22,500 as his basic salary which is way higher than the current floor of Minimum Wages (Rs. 13,000).

The scope for demanding higher wages isn’t possible at Sana’s shop. Sheikh Sana laughed and said: “There are many workers who think what we offer is too less for what they are worth. But I never entertain such requests as I am very particular about one’s skill. I always make sure if a worker is worthy of more salary or not.”

Just opposite to Royal Woodworks is an industrial supply shop called ‘Shri Guru Enterprises’ whose owner, Shivu, also maintains that he pays Rs. 18,000 to the three workers that are employed at his shop.

Under the Act, an employer is bound to pay the fixed minimum wage to his/her employee irrespective of their capacity to pay. There are jobs that might offer Rs. 500- 1000 more than the worker’s current salary. Jobs like these are seen as a leeway to earn some extra money to mitigate their financial crunch. “I tried to switch jobs but risked one month worth of salary for it. My previous employer refused to pay me one month’s salary as I went to work for another shop that was paying me more. This is very common in our profession which is why most of us have to stick with the jobs we have, however low the salary might be,” said Baba Jan another worker from a small carpentry shop in Bengaluru. The absence of a written agreement with the employer minimises the scope for these workers to lodge a complaint in order to get what’s rightfully is theirs.

Avinash Thakur, a lawyer who specialises in labour rights shed some light on the condition of grievance redressal mechanisms in India. “Each industry has its own grievance mechanism for labourers. It is not specific to Minimum Wages. In the event of a dispute between a worker and his employee, both the parties can approach the committee which handles disputes and quarrels. There are different levels within the committee based on the severity of the issue. In the case of Minimum Wages related issues, since the laws are set by the state government, a labourer can approach the Labour Commissioner’s office to seek assistance related to his/her complaint. While the Labour Commissioner is the highest person of authority, on the district level a labourer can also approach Assistant Labour Commissioner officers,” said Thakur.

He highlighted the issue with such redressal mechanisms. He said: “The fact that not many people seek what rightfully is theirs (in case of Minimum Wages) shows that not many labourers are aware of it. Lack of awareness about the existences of committees that are in place to hear them out makes such workers more vulnerable to exploitation since they think there is no way out.”

It was only in 1992 when the Supreme Court of India suggested that expenses like children’s education and healthcare requirements must be included in Minimum Wages. But Baba Jan, who remained unemployed for the most part of the pandemic, was forced to withdraw both of his daughters from a local private school. He said: “I was unable to pay the fees for my daughters’ education. Hence, they were kicked out of the school.” Baba has three daughters. Two of them are eligible to go to school and the youngest one should join a school by now. However, financial difficulties are proving as a hindrance to the education of the two girls already and therefore he is stalling the admission of his youngest daughter.  In order to push their children out of the loop of inadequate livelihood, these workers believe that their children need to be educated in private, English-medium schools, hence they leave government schools as the last resort.

Basic pay, dearness allowance and retaining allowance are all covered under minimum wages. Allowances like HRA (housing rent allowance), bonuses and gratuity are however excluded from it. Workers like Fayaz and Baba Jan are hopeless to obtain promotions let alone bonuses. Apart from one designated holiday per week, which they mostly spend by working at odd jobs to earn Rs. 100-200 per job, they can’t even request for an extra holiday without their salaries being deducted, a practice corroborated by Sana Sheikh who often cuts his employees’ salary in case the worker doesn’t show up for work. In order to maintain humane working conditions, the Minimum Wages rule prescribes only eight hours of work with one or two intervals in between. While these workers spend 12 hours working with only one- hour interval for lunch.

Most workers do not get reasonable time to take lunch breaks | Courtesy: Govind Goyal

In 2019, the Parliament passed a new set of Codes on Wages that was set to make provisions on timely payment of Minimum Wages to workers. These provisions were extended to all sectors, be it organized or unorganized. However, the Codes have not been implemented yet as the various states of the country have not finalized on the rules.

Why minimum wages?

Amit Basole, an economics professor at Azim Premji University in Bengaluru, who heads the Centre for Sustainable Employment and has an expertise on labour economics explains why Minimum Wages are required. He said, “Typically, you need Minimum Wages in those cases where the supply and demand forces of the market are going to end up in a price or in this case wages that is lower than some standard that you have in mind. However, that standard is not set by the market since it will base a wage according to the supply and demand. On the other hand, according to independent and ethical standards, a living wage should be at least so much.

It is required more because if wages are left to the market itself, it won’t provide such ethical wages to the labourers. Hence, we need a law to set the floor amount.”

Out of the total workforce in India, 92% are informal workers- according to the NSSO Employment- Unemployment Survey of 2011-12. In spite of the various schemes that provide services like healthcare and cooking gas at subsidized rates as offered by the central government and various state governments, an unskilled worker often finds himself unable to avail such schemes due to lack of documentation. Both Fayaz and Baba Jan said: “We have tried to register ourselves for schemes like Pradhan Mantri Ujjwala Yojana but our applications are always rejected as we can’t produce proper documents. Now, to get those documents in place we have to pay bribes to the officials which is taxing on our pockets. So, we don’t avail these schemes at all.”

Something as basic as ration, which provides food grains at subsidised rates, is not supplied to these workers by the Public Distribution System. They claim that they only get rice as ration whereas they are supposed to get pulses and salt too. They have to bear the expenses of buying pulses and vegetables on their own.

Man at work | Courtesy: Govind Goyal

Regarding the accessibility of schemes Basole said, “The documentation requirements are stringent. In such cases wherein a worker is unable to avail schemes due to whatever reasons attached with documentation, the better way to design such schemes (from the point of view of the workers) is to make it as easy as possible to show that these beneficiaries are legitimate. The government can expand the list of documents that are required. For example, if you don’t have this then you can submit any other kind of document. Or maybe if a worker’s employer can write a letter to legitimise the authenticity of the beneficiary. Usually, the excuse that bureaucrats make for not adopting such measures is that it would invite a lot of false beneficiaries. That’s always a trade off the government faces between making the accessibility of schemes really restrictive or relaxed in which case they might have to risk some leakages.”

Labour Unions like the All-India United Trade Union Centre (AIUTUC) have time and again raised the issue of non-payment of minimum wages to the government. Shanmugam, the state secretary of AIUTUC, has led many protests to ensure the proper implementation of minimum wages, but their voices are left unheard. “Labourers, be it skilled or unskilled, are not provided even 50% of the wages that are prescribed by the International Labour Organisation (ILO). Even those labourers who are employed by the government itself won’t get adequate wages,” he said. His organisation has demanded that Minimum Wages should be set at Rs.24,000 per month by the state government. He explained: “It takes at least Rs.20,000 to 25,000 for a person to lead a decent life with his/her family. We have made the calculations and at a time when inflation is high, a minimum of Rs.24,000 is required to run a household.”

The organisation has identified the problem that lies in the proper implementation of Minimum Wages. “None of the shopkeepers or employers keep a record of how many workers they have employed in their shops. Lack of bookkeeping on the part of employers often misleads the labour department of the actual number of workers in an industry,” said Shanmugam.

Despite all the efforts taken by the various trade unions of Karnataka, unskilled workers of Bengaluru like Fayaz and Baba Jaan continue to live in despair. They only hope that the higher authorities will not turn a blind eye to their issues. “We are not left with many options but to stick to our jobs, regardless how much it pays. Something is better than nothing. We hope our children don’t fall into this trap in the future. For now, we’ll strive with what we have and continue to seek help from the government.”


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