Dignity of livelihood at stake

In the wake of Parliament’s recent nod to the Code on Wages Bill, 2019, it’s rather ambitious to identify a window for workers’ rights in the cities within the city government’s framework.

Dignity of livelihood at stake


In the wake of Parliament’s recent nod to the Code on Wages Bill, 2019, it’s rather ambitious to identify a window for workers’ rights in the cities within the city government’s framework. One of the obvious reasons to have a law that defend the interests of the working people is that after the 1990s, the informal sector has grown by leaps and bounds. In India, over 90 per cent of the workers work in the unorganised sector. Among the rest, the majority does not have job security or proper wages. ‘Casualisation’ and ‘contractorisation’ have severely affected the bargaining capacity of the working class. In some sectors, the casual workers are more in number than the regular workmen.

As many as 82 per cent of the workers have no written contract with the employer. A startling 77.3 per cent of the workers have complained about wages and holidays. And 69 per cent have no access to social security benefits of the State. There is another form of informalisation that is gaining currency in the cities — the growth of app-based or platform-based workers. For example, food delivery persons working for top aggregators hardly have security of wages or work. 

During the past three decades, there has been a massive increase in the total wealth generated in the country. The cities contribute roughly 70 per cent of it. However, the distribution of this wealth in the form of various social securities has weakened. According to a report of the Azim Premji University’s Centre for Sustainable Development, among the regular wage-earners, more than 57 per cent have been earning less than Rs 10,000 per month. Around 59.3 per cent of the casual workers are getting less than Rs 5,000. If another 25 per cent in the wage bracket of Rs 5,001-7,500 are added, around 84.3 per cent of the casual workers are getting less than Rs 7,500.

Formal housing has also decreased over the years. Formal housing means where either the state or public spending is used to construct houses for the working people. It has fallen from over 6 per cent to nearly 3 per cent. According to Prof Ravi Srivastava from the Institute of Human Development, for any developing nation the bare minimum of 25 per cent of housing must be provided in the formal sector and the private or informal housing market can cater to the 75 per cent. However, in the Indian scenario, the situation is precarious, especially after the implementation of neo-liberal policies.

The latest move is in the form of subsuming of four Acts into the Code on Wages Bill — Payment of Wages Act, 1936; Minimum Wages Act, 1948; Payment of Bonus Act, 1965; and the Equal Remuneration Act, 1976. The Central Government terms it a historic decision, saying that the law has been made easy to interpret. However, working-class unions have opposed it. The Rajya Sabha witnessed an apology for a debate on the Bill. Except a couple of MPs, none had come prepared for the debate. Despite the fact that over 50 per cent of the population is going to be affected by the new law, most of the members were not present in the Rajya Sabha. The Bill was passed by a massive majority: 85 voting in favour and eight against.

Provisions of the Bill are draconian, including allowing advance payment, which was earlier considered to be a step towards bondage of the workmen. The previous law which held a criminal obligation on the employer to pay the wages is replaced by a civil wrong. Above all, the method to calculate the wages is flawed. The Supreme Court directions to calculate the minimum wages were on the following lines: per capita food intake of at least 2,700 calories for a worker’s family comprising three units; per capita cloth of at least 18 yards per annum; provision of housing as per minimum rent charged by the government industrial housing scheme for low-income category etc. The Bill leaves the fixation of minimum wage at the discretion of the government — both Central and state. 

Optimism of Seoul Declaration

Implementation of the Code on Wages will lead to an erosion of the rights of workmen. In this context, the charter prepared by the city government of Seoul is an eye-opener. This declaration on ‘Decent Work City’ speaks about the role of the city government in ensuring ‘decent work’ to the people engaged in different kinds of work within the city limits. The declaration, once adopted, shall become a document to guide the city government and employers to ensure that ‘decent work’ is provided. The preamble quotes from the ILO (International Labour Organisation) policies, “The organisation proposed quality and quantity boost of employment, guarantee of rights to work, social protection, and social dialogue as the strategic pillars of the ‘Decent Work Agenda’, and has been thus far cooperating with its tripartite constituents around the world to realise the agenda.”

Once the Seoul Declaration is accepted by the city government, the following provisions will be implemented:

  • Concur with the ILO’s strategy for creating ‘decent work’, and strive to practise it at the city level. Cities’ tripartite constituents will join forces with international organisations and the Central Government to devise a ‘decent work’ strategy at the city level, and to that end strengthen the international cooperation among cities.
  • Strive to create quality jobs at the city level. Ways to stabilise employment, including creation of decent jobs and the regularisation of irregular workers, will be promoted. Also, easy access to jobs will be actively pursued, and efforts to provide sufficient education and training opportunities for workers today and tomorrow will be carried out.
  • Recognise the importance of ILO’s Fundamental Conventions, which include the basis of ‘decent work’, namely the freedom of association and the right to collective bargaining, and endeavour to provide appropriate social protection at the city level. Also aim to ensure opportunities that guarantee adequate wages such as the living wage for low-income workers, and strive to build effective social safety nets for workers within and outside the labour market.
  • Based on the cooperation of the Centre, ‘decent work’ policies at the city level should be collectively made by all actors such as the city government, trade unions, employers’ organisations, and civil society.
  • Pursue a ‘decent work city network’ to share and spread ‘decent work city’ strategies. Establish a collaborative body of ‘decent work’ cities to share policies of one another, and spread results thereof.
  • Proactively respond to various changes in employment arrangements, while at the same time strive to build a ‘City with Respect for Labour’.

Limitation and scope of network

While it sounds quite radical that the city government will play a proactive role to provide ‘decent work’ for the workmen, there is skepticism that under the shadow of federal laws, the city government will hardly have any scope to intervene. However, there is evidence of proactive legislation in the interests of the unorganised working class in Kerala and Maharashtra. Kerala has announced a minimum wage of Rs 18,000 per month; in Maharashtra, there are laws for head-load workers and other informal-sector workers. But these laws are legislated by state governments; city governments in India hardly have any power to make such interventions.

But this does not completely rule out the scope for intervention in the cities. The provision for ‘decent work’ in the city can be embedded in the Smart City and AMRUT (Atal Mission for Rejuvenation and Urban Transformation) plans. These plans are about infrastructure and area-based development in the cities. The city governments, if they adopt the Seoul Declaration, can embed the provisions of ‘decent work’ in the Smart City and AMRUT plans, wherein infrastructure development is taking place. There is also scope for standing committees of the city governments working under the elected council. These standing committees, especially those related to imparting social justice, have a key role to guide for providing such a direction. During my tenure as Deputy Mayor of Shimla and ex officio chairperson of the standing committee on social justice for the city, such cases were brought to the notice of the committee and later settled. These committees, which are rather redundant in the cities, must be made functional. Once the city concerned adopts the Seoul Declaration, such a paradigm shift in the policy can be adopted in the city’s charter. But to put this into practice, the city governments will have to create a policy framework. This is difficult, but definitely not impossible.


The Code on Wages Bill, 2019, was passed by the Lok Sabha on July 30 and by the Rajya Sabha on August 2. As per Union Labour Minister Santosh Gangwar, the legislation will benefit about 50 crore workers in the country. It seeks to regulate the wage and bonus payments in all employments where any industry, trade, business, or manufacture is carried out. The Code replaces the following laws: (i) Payment of Wages Act, 1936; (ii) Minimum Wages Act, 1948; (iii) the Payment of Bonus Act, 1965; and (iv) the Equal Remuneration Act, 1976.

Coverage: The Code on Wages will apply to all employees. The Central Government 

will make wage-related decisions for employment in the Railways, mines, oilfields etc. State governments will make decisions for all other employments. Wages include salary, allowance, or any other component expressed in monetary terms. This does not include bonus payable to employees or any travelling allowance, among others.

Floor wage: According to the Code, the Central Government will fix a floor wage, taking into account living standards of workers. It may set different floor wages for different geographical areas. Before fixing the floor wage, the Centre may obtain the advice of the Central Advisory Board and may consult withthe state governments.The minimum wages decided by the Central or state governments must be higher than the floor wage. In case the existing minimum wages fixed by the Central or state governments are higher than the floor wage, they cannot reduce the minimum wages.

Fixing minimum wage: The Code prohibits employers from paying wages less than the minimum wages. Minimum wages will be notified by the Central or state governments, based on time or the number of pieces produced. The minimum wages will be revised and reviewed by the governments at an interval of not more than five years. While fixing minimum wages, the governments may take into account factors such as skill of workers and difficulty of work.

Overtime: The Central or state government may fix the number of hours that constitute a normal working day.  In case employees work in excess of a normal working day, they will be entitled to overtime wage, which must be at least twice the normal rate of wages.

Payment of wages: Wages will be paid in (i) coins, (ii) currency notes, (iii) by cheque, (iv) by crediting to the bank account, or (v) through electronic mode. Wage period will be fixed by the employer as daily/weekly/fortnightly/monthly.

Deductions: An employee’s wages may be deducted on certain grounds including: (i) fines, (ii) absence from duty, (iii) accommodation given by the employer, or (iv) recovery of advances given to the employee. These deductions should not exceed 50% of total wage.

Bonus: All employees whose wages don’t exceed a specific monthly amount notified by the government will be entitled to an annual bonus. An employee can receive a maximum bonus of 20% of his annual wages.

Offences: The Code specifies penalties for offences committed by an employer, such as (i) paying less than the due wages, or (ii) for contravening any provision of the Code. Maximum penalty is imprisonment for three months along with a fine of up to Rs 1 lakh.

Gender discrimination: The Code prohibits gender discrimination in matters related to wages and recruitment of employees for the same work or work of similar nature. Work of similar nature is defined as work for which the skill, effort, experience and responsibility required are the same. 

—The author is former Deputy Mayor, Shimla

Source: www.prsindia.org


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