Editorial Notes

[Editorial Notes] The broken promise of decent and fair wages

Informal sector workers account for 93% of the total working population and contribute to over 60% of India’s GDP and the proposed rules to the Labour Code on Wages Act 2019 struck a blow against the aspirations of millions of workers in the informal sector.
By IASToppers
November 26, 2019


  • Introduction
  • What is Labour Code on Wages Act, 2019?
  • What is the issue?
  • What is Starvation Wages?
  • Archaic framework as reform
  • What is the real problem with the ‘floor wages’ concept?
  • Swift passage of Labour Code on Wages Act, 2019
  • Conclusion

The broken promise of decent and fair wages

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During the monsoon session of this year, the Parliament passed the Wage Code Bill to ensure minimum wages for informal sector workers. The proposed framework of the law to determine wage continues, as explained by experts, to push ‘starvation wages’ in India. In view of this, the current draft rules proposed were expected to bring positive changes for workers in India but it doesn’t stand to the expectation.


What is Labour Code on Wages Act, 2019?

Code on Wages

  • The Wage Code law passed in the August 2019 (Monsoon Session), ensures the minimum wages being paid to all employees and workers in India.
  • The Code consolidates, subsumes & transforms four central labour laws relating to wages, namely: The Equal Remuneration Act, 1976; the Minimum Wages Act, 1948 the Payment of Wages Act, 1936 and the Payment of Bonus Act, 1965.
  • The Code introduces a new concept of “floor wages“, which rates will be fixed by the Central Government taking into account the minimum living standards of a worker.
  • Once the Code is enacted, the minimum rates of wages fixed by the State Government cannot be less than floor wages as determined by the Central Government.

What is the issue?

  • The recently reported “Consumer Expenditure Survey” shows that the average family expenditure in rural areas to be ₹83 per day, and in urban areas as ₹134.
  • Therefore, the government will fix the floor wages based on these kind of facts and that would be unexpectedly low for the workers.
  • The “starvation wages” which currently guarantees just ₹178 per day, will continue to exist and this government, like the ones preceding it will not go beyond “offering” “roti, kapda aur makaan (food, clothing and housing”).
  • It was expected that the rules would have considered the Supreme Court of India’s landmark jurisprudence in the ‘Raptakos’ case (1991) which advocated the concept and the right of a living wage.
  • The draft rules do not match this glorious picture and has in effect struck a blow against the aspirations of millions of workers in the informal sector.
  • The figures show that workers will continue to live in exploitative and marginalised conditions, where their constitutional right to a fair wage will be infringed upon by employers and the state.
  • This will happen despite ‘Need-Based Minimum Wage’ being a Supreme Court jurisprudence (covering nutrition, health care, education, housing and provisions for old age as well).
  • Therefore, in the draft rules, it should have been treated as a fundamental constitutional right for every citizen of India.
  • On these lines, it is worth mentioning that the governments of Delhi and Kerala have not only managed to achieve a living wage jurisprudence in recent years but have also set the highest living wage in India (₹14,842 a month in Delhi and ₹600 a day in Kerala).

What is Starvation Wages?

  • The starvation wage means wages which are below the level necessary for subsistence.
  • In simple terms, asmall amount of money that someone earns that is not enough for ordinary living.

Archaic framework as reform

  • The concept and intention of floor wage in the draft rules only reiterate archaic principles which were echoed by the Constitutional Bench of Supreme Court in  Unichoyi And Others vs. The State of Kerala.
  • The court remarked that in an underdeveloped country which faces the problem of unemployment on a very large scale, it is not unlikely that labour may offer to work even on starvation wages.
  • Unfortunately, this situation still prevails in India where the labour market preys on the excess availability of workers for whom living a precarious life is their permanent mode of existence.
  • In such a situation, the workers are continued to be lured to work at their will on less than minimum wages and in exploitative conditions.
  • A floor level wage would only encourage and exacerbate this archaic practice and promote forced labour.
  • Another huge concern with the law is in its provision of an arbitrary deduction of wages (up to 50% of monthly wages) based on performance, damage or loss, advances, etc.

What is the real problem with the ‘floor wages’ concept?

  • In a country such as India, where employers continue to exploit with impunity, this provision will only continue to push workers further into exploitative conditions.
  • This will make the lives of workers worse as the draft rules do not clarify the governance and institutional structure for the labour inspection system” in the law.
  • The International Labour Organisation’s Labour Inspection Convention of 1947 (Convention C081) which has been ratified by India, provides for a well-resourced and independent inspectorate with provisions to allow thorough inspections and free access to workplaces.
  • The draft rules propose another ad-hoc and unclear mechanism called the “inspection scheme” ignoring the above provisions.
  • All of this implies that in the absence of clarity in the draft rules, workers will not be able to demand even basic work rights in the fear of wage deductions and will continue to be oppressed and marginalised.

Swift passage of Labour Code on Wages Act, 2019

labour worker The broken promise of decent and fair wages

  • All the above provisions are not surprising because of the haste with which the law was passed by Parliament in the last monsoon session.
  • There was not much discussion in view of the everyday survival and livelihood issues faced by millions of workers in India, due to their underprivileged social status and caste in comparison to that of employers and the state.
  • It is disheartening that a law which was expected to provide economic and social justice to most of the population, now has provisions which will exploit workers further. And there is no accountability from elected representatives on the broken promises of decent and fair wages.


The Labour Code on Wages Act 2019 and the draft rules have failed the lives and the aspirations of over 50 crore informal workers in India. Working people are a national asset; undermining their well-being should be considered the biggest anti-national act.


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