Breaking ground

India is thinking of transitioning to a living wage by 2025. It is indeed a well-thought-out and innovative idea that needs to be implemented following a middle path.

A living wage could be a game changer and a reasonable solution for many employment-related issues. For instance, while it is not feasible to grant regularization, i.e., permanent jobs, to the entire massive population, granting living wages in place of minimum wages, especially in government organizations and PSUs, could remove the frustration of unregularized workers. This could be extended to labourers—contractual, casual, daily, temporary, etc.

However, one size does not fit all. For certain entities in the private sector and in some places in the government—mid-scale, small scale, etc.—a steep rise may not be feasible. It is paramount that organizations breathe and not bleed. The Apex Court, in its various dictums, has held that wages should be fixed inter alia based on the paying capacity of employers. The capacity to bear the burden on pay pockets and other such factors need to be examined to see if the employers in question have the capacity to pay higher wages, benefits, etc., or not. At times, there are wage boards set up to fix pay packages for different categories of employees working in particular sectors.

In Killick Nixon Limited vs. Killick & Allied Companies, 1975, the Supreme Court's 6-judge bench decision regarding the fixation of wages held that the problem needs to be viewed from various important aspects, some of which are as follows: the condition of the wage scale prevalent in the company; the condition of the wage level prevalent in the industry and the region; the ability and potency to cope with the economic requirements of daily existence consistent with status in society, responsibilities, efficiency at work, and industrial peace; the industry and the region; avoidance of huge distortion of wage differentials taking into reckoning all persons employed in the concern; the compulsive necessity of securing social and distributive justice to the workmen; the capacity of the company to bear the additional burden; the interest of the national economy; repercussions in other industries and society as a whole; the state of the consumer price index at the time of the decision, etc.

Thus, it is to be seen whether any such modification will have an impact on various aspects of an entity. As a matter of fact, the living wage is a positive and enterprising thought process; it just needs to be carefully implemented. Indeed, it is unfortunate to see daily wagers and contractual workers spending decades on bare minimum wages. As a midway solution, instead of having a uniform living wage, considerations such as the nature of employment (skilled, unskilled, semi-skilled), educational qualifications, state-wise needs, etc., of employees, financial capacity of employers, earnings, nature of business, geographical spread, strength of employees, category, etc., may also be considered. This would aid in the ease of business and attract better financial investments.

Living wage, as defined by international organizations, is the wage level necessary to afford a decent standard of living for workers and their families, taking into account the country's circumstances and calculated for work performed during normal hours. Thus, both the living standard of workers and economic feasibility are to be considered.

It also needs to be noted that any variation in wages will invite changes in the deposition of Provident Fund, gratuity, bonus, ESI, overtime, leave wages, and other such statutory benefits. While making changes, these too will need to be addressed. Further, it needs to be ensured middlemen are not consuming the wage share of workers and that the same is duly getting deposited in accounts. The government has rightly made rules for the deposition of wages into the accounts of workers and limiting cash transactions in the last few years.

Living wage could be revolutionary for various categories of employees in different sectors. Globally, when countries focus on labour legislations, as India has been doing, it is widely appreciated. Positive and middle-path strategies, apart from ensuring the well-being of many, will be overall very conducive to foreign investments.

The writer is a practising Advocate in Supreme Court and High Court of Delhi. Views expressed are personal