Liberalisation and Abolition of Wage Boards: Supreme Court Defies the Tilt

Published date01 August 2015
Date01 August 2015
Subject MatterArticle
Sophy K. J.*
Wage Boards, one of the methods of wage fixation, decide wages
in profiteering industries balancing t wo concepts- profit-sharing
and fair returns on capital. T his tripartite mechanism ensures
that the workers a re paid fair wages for increas ed productivit y
in the industry. The const ruct of ‘fair wage’ though ambiguous
in definition, has been im plemented through wage boards since
1946 in India. This paper attempts to delve into the importance
of wage boards in the era of liberalisation. The study has been
done analysing the judgment delivered by the Supreme Court in
ABP Pvt. Ltd. v Union of India wherein the court rejected the
argument of growth of newspaper industry due to liberalisation
and irrelevance of ‘antique’ Wage Boards in the current economic
scenario. The judgment clearly displays the popular arguments
of globalisation to discredit the institution of wage boards in
newspaper industry. On account of th e prevalent debates on
‘individualism’ vs. ‘collectivism’ and negation of contemporary
relevance of wage boards the author undertakes a thorough
analysis of wage boards referring to their historical evolution,
long standing as machinery that ensures socio- economic justice
and degenerati on of workers’ right to fair wages in the disguise
of fruits of liberalisation .
I. Introduction
The standardisation of concept of wages has gone for numerous
constructive terminological dialogues around varyi ng concepts such as
subsistence wage1, starvation wage2, ordinary wage3, statutory m inimum
* Assistant Professor, National Law University, Delhi.
1 Karl Marx refers to ‘subsistence wage’ as wage that ensures subsistence of the worker
and family and keeps hi m/her alive for the durat ion of the work.
2 This term is referred in the case of Unichoy v State of Kerala A IR 1962 SC 12 which
indicates that wage that ensures to meet the expenses of food.
3 Adam Smith has referre d to this term as ‘the lowest compatible with common humanity
that is, with cattle-like existence’.
Journal of National Law University, Delhi [Vol. 3144
wage4, need-based minimum wage5, rise-above the poverty line wage6,
living wage7, fair wage8 etc. The regulation of wages under the statute, the
Minimum Wages Act, 1948, has assured statutory minimum wage in the
sweated industries though its method of calculation is still not certain and
transparent. Apart f rom the fixation methods under the Min imum Wages
Act, the Committee method9 and Notification Method10, other methods such
as Wage Boards, bi-partite Collective Bargaining, Conciliation, Arbitration,
and Adjudication are used as methods of wage determination. Among these,
wage boards remain as a separate institutional mechanism which had a
natural development of its own due to synergy between the employers and
employees to promote industrial peace a nd economic development post-
independence. Thus on the basis of their origin wage boards fall into two
categories viz., statutory wage boards11 and voluntary ones.12 The industry
level setting of wages by wage boards following the principles of wage
fixation, such as ‘capacity to pay’ and ‘Industry-cum-region’, has relaxed
government’s interventionist tenet in wage determination. It is a special
mechanism over other methods as wage determination is facilitated through
tripartite member board for deciding wages above minimum wage level.
4 Wages according to the Mi nimum Wages Act 1948.
5 Need based Mini mum Wages is calculated on the basis of identification of the needs
of the worker. The formula suggested by Aykroyd in 15th Indian Labour Conference is
referred to as need based Mi nimum wage formula.
6 T his term is referred in Fi rst Central Pay Commission Repor t 1946 which indicates
that the wage should be drawn above the poverty line a nd where a choice of diet and the
chance of some cultural life or recreation will also be possible.
7 Livi ng wage represented a standard of living which provided not merely for a bare
physical subsistence but for the maintenance of health a nd decency, a measure of frugal
comfort including education for the child ren, protection against ill-hea lth, requirements
of essential social needs and some i nsurance against the mor e important misfort unes.
8 Lower limit of the fai r wage would be minimum wage but the upper lim it was set up
by the capacity of the industry to pay.
9 Under th is method, committe es and sub-committ ees are set up by the appropriate
Governments to hold enquiries and ma ke recommendations with regard to t he fixation
and revision of minimum wages, as the case m ay be.
10 In this method, the Government publishes its proposals in the Official Gazette
for information of the persons likely to be a ffected thereby, and specifies a date not
less than two months from the date of t he notification for taking t he proposals into
11 E xamples like wage board under Working Journalists and O ther Newspaper Employees
(Conditions of Service) and Miscellane ous Provisions Act 1955 and Bombay Industrial
Relations Act 1946.
12 Voluntary wage boa rds in various industries such as cot ton textiles, cement, sugar,
jute, tea plantation, coffee, rubber plant ation, iron and steel, coal mini ng, iron ore mining,
limestone and dolomite mining, engine ering, ports and docks, leather and leather goods,
road transport a nd electricity undert akings.

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