Page 144 - DMGT106_MANAGING_HUMAN_ELEMENTS_AT_WORK

Managing Human Element at Work

Notes (g) To obtain for the worker a just share in the fruits of economic development.

(h) To avoid following a policy of high wages to such an extent that it results in substitution
of capital for labour there by reducing employment.
(i) To prevent high profitability units with better capacity to pay a level of wages in
excess to the prevailing level of wages in other sectors.
(j) To permit bilateral collective bargaining within national framework so that high wage
islands are not created.

(k) To encourage the development of incentive systems of payment with a view to raising
productivity and the real wages of workers.
(l) To bring about a more efficient allocation, utilisation of manpower through wage
differentials and appropriate systems of payments.
6.3.2 Regulations Adopted

In order to achieve the above objectives under the National Wage Policy, the following
regulations have been adopted by the State:
(a) Prescribing minimum rates of wages

(b) Compulsory conciliation and arbitration
(c) Wage boards
Minimum Wages: In order to prescribe the minimum rate of wages, the Minimum Wages
Act, 1948 was passed. The act empowers the government to fix minimum rates of wages in
respect of certain sweated and unorganized employments. It also provides for the review
of these wages at intervals not exceeding five years.
Compulsory Conciliation and Arbitration: With the object of providing for conciliation and
arbitration, the Industrial Disputes Act, 1947 was passed. It provides for the appointment of
Industrial Tribunals and National Industrial Tribunals for settlement of industrial disputes
including those relating to wages.

Wage Boards: A wage board is a tripartite body with representatives of management and
workers, presided over by a government-nominated chairman who can act as an umpire in
the event of disagreement among the parties. Technically, a wage board can make only
recommendations, since there is no legal sanction for it, but for all practical purposes, they
are awards which if made unanimously are considered binding upon employers.
6.3.3 Wage Policy in a Developing Economy

A suitable wage policy for a developing economy must ensure economic growth with
stability. If the wage level is too high it will hamper industrial growth. If the wage level
is too low, it will adversely affect the workers. Therefore, a suitable wage level is necessary
to sustain a steady growth of the economy. There are two main considerations in wage
fixation. They are:

(a) To adjust wages to cost of living (need-based wages)
(b) To link wages with productivity.
Need-Based Wages

The meaning of the term ‘need-based wage’ is that the wage should enable the worker to
provide for himself and for his family not merely the basic necessities of food, clothing
and shelter but also include education for children, protection against ill-health,
requirements of essential social needs and a measure of insurance against misfortunes and
old age. The Indian Labour Conference held in 1957 accepted the following norms of
determining the need-based wage:

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