Here is an essay on ‘Wage Policy in India’ for class 9, 10, 11 and 12. Find paragraphs, long and short essays on ‘Wage Policy in India’ especially written for school and college students.
Essay # 1. Meaning of Wage Policy:
Wage policy is a determinant of the shares of the rival claimants of the product industry and national dividend, but there often may be a conflict between its short run and long run objectives as well as between private and social interest. There is, of course, theoretical generalization or principles that may provide scientific guidelines for framing a wage policy.
Equally important in this context are the concrete social facts that must be taken into account in its formulation at any given time. No principle on wage policy can ever be applied in vacuum and in disregard of the realities of a situation.
Essay # 2. Objectives of Wage Policy:
The chief objectives of wage policy in underdeveloped countries are five-fold:
(1) Minimum Wage:
Trade is need for floor income for workers in “sweated” trades. Left uncontrolled, the wage levels would be extremely low. There is, therefore, a need to fix some minimum wage to prevent exploitation of labour. According to H.A. Turner the protection of workers against exploitation or unduly low wages remains wage policy’s major pre-occupation for the underdeveloped areas.
(2) Wage Ceiling:
The question of wage ceiling is important because of the damaging inflationary consequences that follow from an uncontrolled upward movement of money wage.
Productivity—based on wage increases should form the upper limit. This does not, however, imply that all labour productivity increases should be pocketed by the workers. In the interest of promoting a faster economic growth, higher proportion of increased resources should be ploughed back into industry, with consumption levels rising only slowly as a consequence.
(3) Wage Structure:
Wage structure refers to set relationships between rates of pay for different jobs Proper wage relationship, job facilities and the acquisition of skills, provides an incentive to higher productivity and encourages the allocation of labour towards sectors of the economy in which demand for labour is increasing. Rational wage differentials should reflect skill, responsibility experience and hazards. Those jobs which carry a higher degree of factors should pay more than those having lower requirements.
(4) Price Stability:
Contracting inflationary pressures should be an element of wage policy. Hyper galloping inflation damages the economic health of a nation, fosters social discontent and erodes worker real wage resulting in constant endeavours to grant money wage increases to protect it. Such wage increases and further pressure to price rise and perpetuates the price-wage cycle. Moreover, runaway inflation hurts the low paid workers more than other since the purchasing power of their real income is reduced.
(5) Export Promotion:
A developing country is badly in need of technical know-how, machinery and industrial raw materials from foreign countries. To pay for these things, foreign exchange is required which is mainly earned through export promotion. Increased productivity and price stability are necessary to boost up exports.
Essay # 3. Objectives Laid Down by I.L.O.:
The objectives of the wage policy in an under-developed or developing economy have been summarised in a publication of the I.L.O. as given below:
(1) To abolish malpractices and abuses in wage payment;
(2) To set minimum wage for workers whose bargaining position is weak because either they are unorganised or inefficiently organised, accompanied by separate measures to promote the growth of trade unions and collective bargaining;
(3) To obtain for the workers a just share in the fruits of economic development supplemented by appropriate measures to keep workers expenditure on consumption goods in step with available supplies so as to minimise inflationary pressure; and
(4) To bring about a more efficient allocation and utilisation of manpower differentials and where appropriate systems of payments by results.
Essay # 4. Wage Policy Statement Since Independence (1947):
For a long time, laissez fair operated in dealing with wage problems. But the beginnings of third party intervention are not all that recent as is popularly believed. The Royal Commission, apart from giving a factual account of wage levels in different industries, referred to the questions connected with minimum wages, standardisation, inter-sectoral wages and incentives, and suggested survey for collection of wage data. It recommended a minimum wage fixing machinery of a wage board type for industries satisfying certain criteria laid down by it.
However, there were no significant developments in the field of wage policy consequent on the Royal Commission’s report. The Labour Investigation Committee which surveyed the position prevailing at that time felt that in the matter of wage fixation the guiding principles, if any, appeared to be in favour of maintaining the status quo ante. It felt that the practice of thinking in terms of short term gains without adopting a scientific attitude in regard to wage fixation would be in the long run detrimental on less to labour than to industry.
It also referred to the difference in levels of wages in agriculture and industries and observed that such differences should not be over emphasised, they could be partly justified because of the conditions under which industrial workers were made to work and live. The fact that agricultural wages were low could not be a justification for keeping industrial wages low as well.
The 1946 programme referred to the following three elements of wage policy which are equally relevant today:
(i) The statutory prescription of minimum wages in sweated industries and occupations and in agriculture;
(ii) Promotion of “Fair wage agreements”; and
(iii) Steps to secure workers in plantation, a living wage.
Essay # 5. Industrial Truce Resolution (1947):
The next significant even of the period was the adoption of the Industrial Truce Resolution (1947), the relevant portion of the Resolution States.
“The system of remuneration to capital as well as labour must be so devised that while in the interest of consumers and the primary producers excessive profits should be prevented by suitable measures of taxation and otherwise, both will share the product of their common effort after making provision for payment of fair wages to labour, a fair return to capital employed in industry and reasonable reserves for the maintenance and expansion of the undertaking.”
The Industrial Policy Resolution (1948) emphasised inter alia its intension (a) to fix statutory minimum wages in sweated industries, and (b) to promote fair wage agreements in sweated organised industries. To facilitate the former, the Minimum Wage Act, 1948, had already been passed. For the latter the Government appointed the Committee on Fair Wages (CFW) “to determine the principle on which fair wages should be based and to suggest the lines on which these principles be applied.”
In this way it is concluded that Wage policy should aim at progressive increase in real wages. At the same time, any sustained improvement in real wages cannot be brought about without increasing productivity.
Thus, the determination of wages implies in evolving and sustaining a wage structure which:
(i) Permits a fair remuneration to labour,
(ii) Permits a fair return to capital, and
(iii) Strengthens incentives to efficiency.
Apart from these, intra-industry and interregional wage differential have relevance. The latter may be due to the limitations of the market or on account of inter-regional disparities in productivity due to differences in technology, capital per worker or organisation. It is expected that with the industries competing for skill in the country as a whole these will soon be eliminated. Inter-industry differentials likewise are also unjustified except on grounds of local differences in technology and capital per worker.
Any wage policy, to be effective has to take into account the existing practices in regard to methods and modes of paying wages as well as the machinery for wage determination. In the context of improving production and productivity, it will have to recognise the role and feasibility of introduction of payment by results in particular lines of activity with necessary safe-guards.
In unorganised sector for the most part, adequate governmental or quasi-governmental machinery may be necessary to provide for minimum wage regulation according to the condition in different areas and industries, but more specifically to protect the workers in weak bargaining position.
We agree with the recommendation of National Commission on Labour that the main objective of a wage policy is to bring wages into conformity with the expectations of the working class and, in the process, seek to maximise wage employment. It should, however, be noted that the increase in money wages of the industrial worker since independence have not been associated with the improvements in productivity. Wage cost as a proportion of total cost has registered a decline and same is true about worker’s share in value added by manufacture.
The Commission further says that wage change beyond a certain level must reflect productivity changes. But the Commission also realised that application of this principle presents difficulties as contribution to productivity levels and changes therein were not easy to measure.
The Commission is of the opinion that, issues concerning wage policy are inter-related on the one hand with broader economic decisions and on the other with the goals set for social policy.
Hence, the wage policy has to be framed taking into account such factors as:
(a) The wage level which can be sustained,
(b) The employment level to be attained,
(c) The requirement of social justice, and
(d) Capital formation for future growth.
Besides, it has also to be taken into account the structural features of the economy and has to be in accordance with pattern of income generation and distribution as envisaged in the development plans.
As regards the present policy of dearness allowances the Commission says that, the present practice for mitigating hardship due to rise in cost of living is to pay dearness allowance over and above the basic pay. It is possible that this practice of adjustment of wages may conceivably lead to inflation.
Keeping living costs under check should, therefore, form an integral part of wage policy. Social considerations cost an obligation to mitigate through some adjustment mechanism the hardships caused by price increase to atleast the vulnerable sections of labour.