A wage bill is an important part of the production cost. For any reason whatsoever, if the wage bill increases beyond the paying capacity of an employee the very survival of the firm becomes difficult. A few such instances are recounted below:
Bharat Ophthalmic glasses – Where Employee benefits exceeded turnover!
During the period 1984-85 to 90-91 the gross benefits per annum, to 521 employees of Bharat, Ophthalmic glass (BOG) exceeded the turnover of the company – every year! The employees have successfully brought down capacity utilization to just 27% of the achievable capacity. When the government released Rs 76 lac to buy plant and machinery BOG generously diverted 50% of the money to pay salaries and wages.
National Textiles Corporation:
NTC has 120 mills and 1.7 lac workers. The accumulated losses are over 3000 crores, the yearly increase in losses being over Rs 400 crore, 40 mills are totally useless, 40 likely to become useless very soon and the balance 40 are terminally sick. During the last 20 years, the government spent nearly Rs 2000 crore on protecting jobs!
Hindustan Fertilizer Corporation Ltd., Haldia:
The plant was shut down in August 1986 but the 1500 string employees continue to receive all their salaries and wages totaling to Rs 150-175 lac per month. The company seems to run on the principle- No work but full Pay. Even additional installments of DA are payable to them. The accumulated loses up to 1992 were over Rs 1400 crore.
Heavy Engineering Corporation:
It is a company producing nothing. It has been established just to employ labour (over 17000 employees with annual losses running to over Rs 100 crore) established in collaboration with Soviet Union and Czechoslovakia (both these countries of course managed to vanish from the world map by 1992 itself!
From the employee’s point of view wages determine his standard of living. Wage policy, therefore is an important issue and recognizing its importance the Constitution of India guaranteed equal pay for equal work for both men and women (Article 39) and reiterated that the State must endeavour to ensure for all workers a living wage and condition of work which ensures a decent standard of life (Articles 43). After Independence the government realized that the wages of workers can’t be left to the fluctuations (in demand and supply of) in labour market conditions. It has decided to fix statutory minimum wages.
Wage Policy in India:
Minimum Wage, Fair Wage and Living Wage
Minimum wage: Minimum wage is that wage which must invariably be paid whether the company, big or small makes profit or not It is the bare minimum that a worker can expect to get for services rendered by him. The 15th Indian labour conference (1957) formally quantified the term minimum have thus:
In calculating the minimum wage, the standard wage, the standard working class family should be taken to comprise three consumption units for one earner, the earnings of women, children and adolescents being disregarded.
Minimum food requirements should be calculated on the basis of asset intake of calories as recommended by Dr Aykroyd for average adult of moderate activity.
Clothing requirements should be estimated on the basis of per capital consumption of 18 yards per annum which would give the average worker’s family of four a total of 72 yards.
In respect to housing, the rent corresponding to the minimum area provided for under Government Industrial housing scheme should be taken into consideration in fixing the minimum wage.
Fuel, lighting and other miscellaneous items of expenditure should constitute 20 per cent of the total minimum wage.