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Friday, July 5, 2019


IN the ongoing world economic crisis situation, there is a rightward political shift worldwide. This is resulting in the pursuit of an aggressive neoliberal economic agenda in favour of the corporates and against all sections of the working people. It is leading to cuts in wages, social security, subsidies, employment, rights, and increase in taxation -- as designed by the international finance capital -- combined with a country-specific divisive agenda. The reflection of this trend is seen in the rise of Trump in USA, his replicas in other countries and in the rise and consolidation of the Modi-led regime representing the communal and corporate forces in India.

In this background, it is not surprising that UN agencies such as the International Labour Organisation (ILO) too are not untouched by it. Two recent examples, both on minimum wages of workers, establish this fact. First, ILO, completely bypassing labourers, joined hands with the Modi government to prepare a report to give legitimacy to cut in the workers’ minimum wages in India. Second, ILO constituted an enquiry committee and condemned the Maduro government for increasing workers’ minimum wages in Venezuela. It condemned the government of Venezuela for “ignoring the Chambers of Commerce and tripartite mechanism” on raising workers’ minimum wage. But it conveniently ignored trade unions in India and the tripartite mechanism while sitting in the Modi government’s committee and fixing minimum wage.


The ILO did not stop there. In Delhi, it called a special meeting with central trade unions for “an informal exchange of views” on the government of India ‘Report of the Expert Committee for Determining the Methodology for Fixing the National Minimum Wage’. The government used an “innovative methodology to estimate a needs-based minimum wage”. This meeting was attended by seven central trade unions -- INTUC, BMS, HMS, AITUC, CITU, AIUTUC and NFITU. CITU was represented by its national secretariat member Karumalaiyan and its Delhi state general secretary Anurag Saxena.

In the meeting, ILO officials took great pains to explain in details the “merits” of the Modi government’s report and the “innovative methodology” adopted by it. Unfortunately for the ILO, however, all seven central trade unions, including the RSS-affiliated BMS, unanimously rejected it. Karumalaiyan questioned the very basis of ILO’s participation in the ‘expert committee’ and the need for a new methodology when Indian Labour Conferences (ILCs), all tripartite bodies and the Supreme Court, have upheld the existing methodology. Saxena questioned the timing of the report as the Delhi government’s notification on minimum wage, based on the current methodology of calculation, is pending before the Supreme Court. The AITUC representative pointed out that ILO officials themselves violated ILO Convention 131 on fixation of minimum wage and having gone beyond their terms of reference. BMS representatives highlighted various fallacies in the methodology itself.

The development comes at a time when ILO is celebrating the centenary of its formation. It was formed within two years of the Great October Revolution by the working class and establishment of the first socialist state.

The meeting was followed by the union finance minister’s pre-budget meeting with trade unions with the theme of ‘ensuring minimum wages for all workforce’. Obviously, it was for clearing ground to enforce the reduction in minimum wages as a big boost for the defaulting corporates.


The expert committee report, published on February 14, is a big fraud being played on the vast marginalised sections of workers. Like using new EPF accounts for projection of higher rate of “formal employment”, new GDP series to project higher economic growth and fudging facts with other manufactured data, the Modi government adopted the deception route to cut workers minimum wage to favour the corporates. It is trying to do this through this “innovative methodology” replacing the existing one under the Minimum Wages Act, 1948 which evolved over a period of 40 years.


Under directive principles of the constitution of India and on the basis of Fair Wages Committee recommendations, the tripartite 15th Indian Labour Conference (ILC) in 1957 decided on the current methodology of calculation having - (i) workers family of three members consumption unit; (ii) 2,700 calories per unit in balanced food as per Dr Aykroyd formula; (iii) 72 yards of cloth per family per annum; (iv) house rent as charged by the government for low income group housing; and (v) additional 20 per cent of (ii)+(iii)+(iv) for fuel, lighting and other miscellaneous expenses.

The Supreme Court of India has approved this current methodology in their judgement in the Raptakos Brett case in 1992, but by adding one more criterion as (vi) Additional 25 per cent to the total of (ii)+(iii)+(iv)+(v) for children’s education, medical treatment, recreation, festivals and ceremonies. Thus, the total of (ii)+(iii)+(iv)+(v)+(vi) becomes the minimum wage.


No doubt, the expert committee report’s methodology of calculation is innovative, but only for the purpose of cutting workers minimum wage. For fudging facts, the expert committee calculated workers family consumption unit as 3.6 instead of 3. Yet, a worker’s total minimum wage, at current price level, comes to Rs 8,892 – Rs 11,622 per month with regional variations, as against Rs 18,000 per month in January, 2016 price level calculated by the Seventh Central Pay Commission (CPC) using the current methodology. The Modi government at the centre and most of the state governments have already accepted and implemented the recommendations of the Seventh CPC. The central trade unions and federations made it as one of the major demands for implementation in all sectors – public and private – across the country and resorted to countrywide strikes for it.

What were the innovative methods which the expert committee used to cut workers minimum wages by about half? (i) First, by reducing per day per consumption unit calorie intake from 2700 to 2400; (ii) Second, by taking very low prices of food items; (iii) Third, by removing 20 per cent of total wage for fuel, light and on miscellaneous expenses and 25 per cent of the total as per Supreme Court judgement, and (iv) Fourth, by replacing all non-food expenditures, including house rent, with two broad categories -- essential non-food items and non-food items.

Publication and timing of the expert committee report has to be seen in the background of employers’ organisations challenging in the Delhi High Court the minimum wage notification, dated March 3, 2017, by the Delhi government. The High Court scrapped the notification, following which the Delhi government has moved the Supreme Court. The CITU Delhi state committee is an intervener party in the matter.

In its interim order of October 31, 2018, the Supreme Court turned down the Delhi High Court judgement, restored the minimum wages notification temporarily and ordered implementation of the notified minimum wages effective from November 1, 2018 till disposal of the case.

It also ordered the Delhi government to constitute a Minimum Wage Advisory Board strictly under the provision of the Act and on its advice, prepare a fresh draft of minimum wages notification and place the same before the Supreme Court for scrutiny and approval. The notified minimum wage for an unskilled worker in Delhi, calculated on the basis of current methodology is Rs 14,000 per month at January 2017 price level as against the expert committee’s Rs 11,622 at January 2019 price level. The next date of hearing is July 2, 2019.


The Code on Wages Bill, the first of the four labour codes proposing to replace all 44 existing labour laws, was placed in the now-dissolved 16th Lok Sabha. The Code on Wages Bill proposes to scrap the Minimum Wages Act, 1948. The current methodology of calculating minimum wages is an exercise to implement the Minimum Wages Act. Following scrapping of the Minimum Wages Act, the current methodology will have no relevance. The government aims to implement the expert committee’s methodology thereafter and it has already taken ILO on board for its assault on minimum wages of workers.