Context
Recently, a two-judge Bench of the Supreme Court of India, comprising Justice B.V. Nagarathna and Justice Ujjal Bhuyan, rebuked the Uttar Pradesh government for detaining workers under stringent laws like the National Security Act following wage protests in Noida, strongly declaring that the State’s core duty is to ensure a “living wage” under the Directive Principles of State Policy rather than branding demanding workers as “terrorists” or “left-wing sympathisers.”
1. Core Concepts: The Wage Hierarchy
To correctly answer conceptual questions in the Prelims, it is essential to understand the distinction between different categories of wages as evolved through Indian jurisprudence and international definitions.
I. Minimum Wage
- Definition: It is the bare minimum amount of compensation that an employer is legally mandated to pay an employee to prevent absolute exploitation.
- Scope: It primarily covers the absolute essentials required for the literal survival of the worker and their family, focusing on basic sustenance like minimal food, clothing, and shelter.
- Evolution in India: Historically governed by the Minimum Wages Act of 1948, its calculation was traditionally guided by the 15th Indian Labour Conference (1957) and the landmark Supreme Court judgment in the Reptakos Brett case (1991), which added educational, medical, and recreational requirements equivalent to 25% of the total wage calculation.
II. Fair Wage
- Definition: It represents a mean position that lies above the minimum wage but remains below the living wage.
- Determinants: The lower limit of a fair wage is always anchored by the minimum wage, whereas its upper limit is determined by the financial capacity of the specific industry to pay its workforce. It balances the cost of living with the profitability of business enterprises.
III. Living Wage
- Definition: According to the International Labour Organization (ILO), a living wage is the wage level necessary to afford a decent standard of living for workers and their families, calculated for work performed during normal hours.
- Scope: It goes significantly beyond mere physical survival. It includes food, clothing, and housing, while explicitly incorporating long-term well-being elements such as healthcare, quality education, social security, transport, and a basic level of savings for unforeseen contingencies.
2. Institutional Framework and International Alignment
I. The International Labour Organization (ILO) Initiative
- The Governing Body of the ILO formally endorsed the principles of estimating living wages during its institutional sessions.
- India is a founding member of the ILO and a permanent member of its Governing Body since 1922, and it has sought technical assistance from the ILO to build data-gathering capacities and establish an objective methodology to measure regional costs of living across different states.
II. Constitutional Provisions in India
The concept of a living wage is deeply embedded in the Directive Principles of State Policy (DPSP) under Part IV of the Constitution of India:
- Article 43: It explicitly states that the State shall endeavour to secure, by suitable legislation or economic organisation, to all workers a living wage, conditions of work ensuring a decent standard of life, and full enjoyment of leisure and social-cultural opportunities.
3. Key Provisions under the Code on Wages
The Code on Wages consolidates four major legacy acts: the Minimum Wages Act, 1948; the Payment of Wages Act, 1936; the Payment of Bonus Act, 1965; and the Equal Remuneration Act, 1976.
| Feature | Details and Statutory Mechanisms |
| Universal Coverage | The statutory right to minimum wages is extended to all employees across both organised and unorganised sectors, replacing the old system which only covered ~30% of scheduled employments. |
| National Floor Wage | The Central Government will determine a National Floor Wage based on minimum living standards. State Governments cannot fix their regional minimum wages below this centralized baseline. |
| Criteria for Fixation | Wages are rationalized according to the skill levels of employees (unskilled, semi-skilled, skilled, highly skilled), geographical terrain, and working conditions. |
| Gender Non-Discrimination | The code strictly prohibits discrimination on the grounds of gender, explicitly including transgender identity, regarding recruitment and wage payment for similar work. |
| Digital Enforcement | Mandatory electronic wage slips and direct bank transfers are institutionalized to create verifiable financial footprints for unorganised workers. |
Q. Consider the following statements regarding the wage framework in India:
STATEMENT I: The concept of a 'Living Wage' is a statutory right extended to all citizens under the fundamental rights of the Indian Constitution.
STATEMENT II: A 'Fair Wage' represents an economic threshold that lies between the floor of a minimum wage and the ceiling of a living wage, and its upper limit is bounded by the financial capacity of the industry to pay.
Which one of the following is correct in respect of the above statements?
(a) Both Statement I and Statement II are correct and Statement II is the correct explanation for Statement I
(b) Both Statement I and Statement II are correct and Statement II is not the correct explanation for Statement I
(c) Statement I is correct but Statement II is incorrect
(d) Statement I is incorrect but Statement II is correct
Solution
Correct Answer: (d) Statement I is incorrect but Statement II is correct
• STATEMENT I IS INCORRECT: The concept of a 'Living Wage' is not explicitly guaranteed as an enforceable Fundamental Right under Part III of the Constitution. Instead, it is a non-justiciable constitutional directive enshrined under Article 43 of the Directive Principles of State Policy (DPSP) in Part IV, which mandates that the State shall endeavour to secure a living wage for all workers.
• STATEMENT II IS CORRECT: A 'Fair Wage' is conceptually defined as a progressive wage scale that settles above the bare survival line of a minimum wage but falls short of a comprehensive living wage. As defined by Indian labour jurisprudence, its lower limit is anchored by the minimum wage, while its upper boundary depends entirely on the financial capacity and profitability of the employing industry.
