In this blog post, Sanjay Kumar Jha, who is pursuing a Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, describes the minimum wage structure for unskilled labourers in the agriculture sector. 

Minimum Wages Act 

One of the earliest legislations in India, the Minimum Wages Act was enacted in 1948, immediately after the country got independence. The Act derives its principle from Article 43 of Constitution of India which mandates that ‘The State shall endeavour 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 labour class. It also takes care of Article 39 of Constitution of India which directs that both men and women shall have equal pay for equal work and shall have right towards securing an adequate livelihood.

Minimum wages means the legally enforceable lowest limit of wage in a given industry in a given State fixed by the process of invoking the authority of the State. The minimum wage must provide, not merely for bare sustenance of life, but also for preservation of the efficiency of the worker by providing for some component of payment towards education, medical & amenities. Minimum Wages Act in India is a welfare Act applicable to the workers in the unorganised sector who lack the collective bargaining and are likely to be exploited. Hon’ble Apex Court of India during passing a judgment in one of the case has observed that the Minimum Wages Act is a piece of social legislation, which protects the day to day living conditions of sweated labour.

Minimum wages Act 1948 provides for fixation of minimum wages by the appropriate governments at the Centre and State for different scheduled employments under their respective domains for different time periods.

In our country, there is no uniform nationally applicable minimum wage. The minimum wage is sector/occupation driven and varies across different industries in the same State and across States for the same Industry. Time and again there has been demand for evolving a National Wage Policy. But fixation of wage depends on some criteria like local conditions, cost of living, paying capacity of Industry, etc., it is difficult to maintain uniform wages throughout the country.

Payment of minimum wages for the persons deployed towards a job for which he is giving labour and time for an output is a legal requirement & the employer is legally liable to make payment of minimum wages & keep proper records of having paid it.

Labourers in Various Sectors

As regards deployment of unskilled labourers in the agriculture sector, they are normally engaged in farming and related activities i.e. ploughing, seed & pesticide spray on farms, production of seeds & allied associated jobs.

If we go by the type & practice of employment in the agriculture sector, labourers may be classified into casual and attached workers. Under the casual system, the labourers are engaged on job basis for which requirement is huge at the seasonal time and very thin during offseason. They remain unemployed during off season or are able to keep themselves engaged in other activities, at times. Under attached system, a person is engaged on a yearly basis for almost entire job. The output derived by the labourer in attached system is divided between the landlord & the labourer in predefined proportion. In fact, attached system is relatively better system as the labourers are co-sharers in this case. But, this also does not assure a minimum guaranteed return to such labourers.

Labourers in the agriculture sector are not well organised. Moreover, female participation in the workforce is higher in agriculture than in any other sector of the economy. Besides, child labour is also engaged in agriculture on a substantial scale.

Seed production is also a branch of agriculture and is a fast growing industry in India. The industry is supposed to be better organised as these are normally managed by MNCs as well as local companies. However, sample survey with regard to the condition of labourers deployed in these sectors do not reveal a good picture of such labourers, and they also face exploitation by their employers.

It has been observed that payment of minimum wages is an issue in the agriculture sector in general and seed manufacturing company in particular. There is undercutting of wages as well as gender discrimination also exists while making payment to male & female labourers.

The purpose of above illustrations is just to indicate the reality that there is no defined rule of employment & wages admissibility in the agriculture sector for unskilled labourers in particular & all other class of labourers generally deployed in the agriculture sector.

Labourers are classified in following categories broadly

1. Unskilled
2. Semi-skilled/supervisory
3. Skilled
4. Highly skilled

The government has notified minimum wages for all the above categories. Both central and state government issues notifications for minimum wages to be implemented in various sector of industry/work under their jurisdiction. The wages constitute two components (Basic & VDA). While the basic remains fixed for a defined period, the VDA gets on revising time to time on the basis of the average Consumer Price Index for the agriculture sector. VDA varies for different areas as per classification of cities of A, B & C.

The above relates to the concept and statutory provisions of Minimum Wages Act.

However, if we really look at the implementation of provisions, the situation is not good at the ground level particularly in agriculture sector and in general in other unorganised sector. The general observation is that workers get less than minimum wages. It is mainly because the agriculture unskilled labourers are mostly unorganised & unaware of the guidelines/notifications on minimum wages. Moreover, there is acute unemployment, low income in some of the States from where labourers migrate to other cash-rich States who engage then as agriculture labourers at a very low cost. Labourers migrating from Bihar, UP, Orissa to Punjab, Haryana for agriculture purpose is a common phenomenon. These labourers are poor chaps and are prepared to work for any wages rather than being unemployed. Further, calculation of Minimum Wages is a cumbersome exercise and often beyond the capability of the small scale unorganised sector employer and most often beyond the awareness level of employee.

In 2005, the Government of India came up with a legislation titled ‘ Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) which gives security of livelihood 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 member is willing to do unskilled manual work.

Practical issues involved in implementing the minimum wages

Now, we will like to know the practical issues involved in implementing the minimum wages at ground level.

Enforcement of minimum wages is done by both the Centre and State Governments within the respective spheres where they notify the minimum wages. Inspecting officers of the labour department at the Centre and State notify the minimum wages. Inspecting Officers of the labour department at the Centre and State conduct regular inspections and in the event of less payment of minimum wages advise the employer for corrective actions. In the case of non-compliance, penal action can be invoked against the employer as per Act.

The multiplicity of minimum wages rates across Centre & State and across occupations does create difficulty in implementation of Minimum Wages. For the most common occupation, say agriculture, 33 States/UTs have different Minimum Wages rates fixed by them. While Delhi has the highest Minimum Wages rates for unskilled agriculture labourers, the UT of Pondicherry has the lowest.

Generally, it is seen that workers get less than minimum wages. Reasons mentioned for poor enforcement include less of enforcement staff as compared to a number of establishment covered by the Act, Ignorance of labourers and often employers also regarding their rights and privileges, delays in justice when a claim for nonpayment of minimum wages are filed before authorities.

The survey of prosecutions and convictions made under the Act reveals that very few cases have been taken up under the Act so far. Penalties for non-compliance of minimum wages Act are very low, and the procedure for imposing the penalty is cumbersome.

Suggestions for improving the situation

1. There has to be a National Wage Policy and various class/section of the workforce (unskilled/semi-skilled/ skilled) to be covered under that. The Policy should stipulate minimum wages on All India platform which can increase in a certain geographical area based on justification and determined formula.
2. The need of the hour is to fix the basic minimum wage especially for unskilled workforce engaged in activities like agriculture, domestic work, etc.
3. Dearness Allowance should form a part of the minimum wages in all occupations.
4. The compliance under Minimum Wages can be improved if the employers are given a single window clearance for filing all labour law related returns.
5. Enforcement Agency needs to be strengthened, and strict penalty levied for non-compliance.
6. Grievance redressal mechanism needs to be prompt and effective.
7. Mass scale awareness campaign need to be launched educating employee/employer on Minimum Wages concept.
8. Simplicity and uniformity in the calculation of Minimum Wages will go a long way in the enforcement of Minimum Wages.