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Wage Determination

Semester III

Means any economic compensation paid by the employer under some contract of
employment to his worker for the services rendered by them.
Basic wage is the remuneration paid or
payable to employees under a contract of

Allowances, on the other hand, are paid in

addition to basic salary benefits, etc

The following types of remuneration paid do not

amount to wages under any of the act
Value of any house accommodation, supply
of light, etc
Contribution to pension, PF

Trade Union Act, 1926

Workmen’s Compensation Act, 1923

Wage Policy in India

Payment of Wages Act, 1936

Industrial Dispute Act, 1947

To ensure a living wage for workers

To ensure equitable pay for equal work
Objectives of national wage policy
To end equitable pay for equal work

To end exploitation and provide remuneration to capital and labour

To fix statutory minimum wages in selected industries and promote fair wage agreements
in the organized sector
To compensate for rise in the cost of living by linking wages with inflation and
geographical area.

To provide for reasonable wage differentials to reflect differences in education, skills. job
responsibilities and nature of job.

To ensure equitable distribution of national income and avoiding the concentration in the
hands of a few rich people.

Industrial Truce Resolution, 1947
Promotion of fair wage agreements in the
more organized industries.
Fixation of statutory minimum wages in
sweated industries

Fair Wage Committee

Was constituted in 1984, consisting of representative of employers, employees and the

government, to enquire into and report on the subject of fair wages to labour.

Three different levels are identified

Living wage

Fair wages

Minimum Wage

Lowest hourly, daily or monthly wage which is sufficient to cover the necessities of
worker and his family.

In September 2007, the national minimum floor level wage was increased to Rs 80 per
day for all scheduled employments from Rs 66 in 2004 to Rs. 45 in 1999, Rs. 40 in 1998
and Rs. 35 in 1996
In calculating the minimum wage
The standard working class family should be consist of 3
consumption unit for one earner
Minimum food requirement should be calculated on the basis
of net intake of calories, foe an average adult moderate
Clothing requirement should be estimated at per capita
consumption of 18 yards per annum.
In respect of housing, the rent corresponding to the minimum
area provided for, under gov. industrial housing scheme,
should be taken into consideration.
Fuel, light, other misc item of expenditure should consitute
20% of the total minimum wage
Children education, medical, marriage, etc constitute 25% of
the total minimumwage

Wage Determination Process

Living Wage
Should enable the earner to provide for himself and his family, ( not only) the bare
essentials of food, clothing and shelter, but (also) a measure of frugal comfort including
education for te children, protection against ill-health, requirements of essential social
needs and a measure of insurance against the more important misfortunes old age
Wage Determination Process

(((((((((((Draw chart by your own))))))))) page 13

Review of organization strategy

Maturity stage of organization

Line of business of the organization

Devising compensation policy

Includes criterion used for determining base
and supplementary compensation
Devising compensation policy
Based on principles of objectivity, fairness,
equity and adequacy

Should be able to attract competent people,
retain them and motivate them.