[Summary] Economic Survey 2019 Vol1Ch11: Minimum Wages for Inclusive Growth: UPSC Mains Answer-Writing

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  1. Prologue
  2. Mock Questions for Mains from Minimum Wages
  3. Introduction: Minimum Wages- origin, evolution
  4. Anoop Satpathy Committee to reform Minimum Wages
  5. Code on Wages 2019
  6. ES19: Way forward beyond Code on Wages
  7. Conclusion: Indeed minimum wage enforcement is important

Prologue

  • After the General Elections 2019, Economic Survey 2018-19 (ES19: आर्थिक सर्वेक्षण) was released in 2019-July by Chief Economic Advisor (CEA: मुख्य आर्थिक सलाहकार) Subramanian K. with a ‘skyblue’ cover because it contained blueprint for $5 trillion dollar economy.
  • As usual, Vol1 dealt with the prediction & prescription of future; whereas Vol2 with the description of the past. At this stage you can ignore the Volume2 because Prelim-2019 is over, and another new survey will come before Prelim-2020- Containing a more latest data. But, volume1 is important for at least the next 3 UPSC mains examinations.
  • Vol1 Chapter 11 deals with the subject of Minimum Wage System in India for Inclusive Growth.
  • Relevance? UPSC IAS/IPS Civil Services Mains Exam General Studies Paper2 (GSM2): Government policies and interventions for development in various sectors and issues arising out of their design and implementation; GSM3: Inclusive growth and issues arising from it.
  • I’ve covered this chapter in the following Youtube Lecture video. This chapter can help in the following type of Mains Questions:

Mock Questions for Mains from Minimum Wages

Answer the following questions in not more than 15m / 250 words:

  1. Discuss the significance of minimum wages in reaping India’s demographic dividend. “न्यूनतम वेतन सीमा” भारत की जनसंख्यिकी लाभांश को परिपक्व बना रही है, चर्चा करें ?
  2. Examine critically the problems in the present system of minimum wages in India & suggest remedies. वर्तमान में भारत में विधमान न्यूनतम वेतन की समस्याओं का आलोचनात्मक परीक्षण करें एवं इसके निराकरण के उपाय भी बताएं?
  3. Despite India’s outstanding growth in the last two decades, low pay and wage inequality remain serious obstacles towards achieving inclusive growth. Suggest remedies to address this problem / OR How does the Code on Wages 2019 address this? पिछले दो दशकों में भारत की विकास दर उच्चतर होने के बावजूद कम वेतन एवं मजदूरी में असमानता, समावेशी विकास के लक्ष्योंं  की प्राप्ति हेतु अवरोधक रही है,  इस समस्या के निराकरण के उपाय सुझाए? / वेतन कोड / संहिता इसे कैसे हल करती है?

Introduction: Minimum Wages- origin, evolution

I’ve covered it in the following youtube video. Gist of the matter is as following

  • (Definition) According  International Labour Organization (ILO: अंतर्राष्‍ट्रीय श्रम संगठन) Minimum wage is the minimum amount of remuneration that an employer is legally required to pay to the worker. It’s usually expressed in amount per day or per hour.
  • The British enacted laws for timely payment of wages but they did not bother with A) minimum wages OR B) equal remuneration for men and women
  • However, “A” and “B” were provided in the Directive Principles of State Policy (DPSP: राज्य नीति के निर्देशक सिद्धांत) in our constitution after the Independence.
  • 1948: Minimum Wages Act  (न्यूनतम मजदूरी अधिनियम), but It suffered from 3 main deficiencies
    • 1) all jobs not covered.
    • 2) jobs which are dominated by women such as domestic maid = lower minimum wages compared to jobs that are dominated by men such as security guard.
    • 3) Unorganised sector workers are neglected.
  • 2019: Labour Ministry setup Anoop Satpathy Committee to suggest reform in minimum wages

Anoop Satpathy Committee to reform Minimum Wages

He suggested that

  • Decide minimum wages based on both of the following factors
    • Cost of food basket (खाद्य टोकरी): consisting of x units of calories, fats and proteins. AND
    • Essential nonfood items (गैर-खाद्य पदार्थ): such as clothing, fuel and light, house rent, education, medical expenses, footwear and transport.
    • Update this consumption basket every 5 years
  • Announce minimum wages in either of the two formats:
    • Proposal 1: Nationallevel minimum wage (NMW): ₹ 375 per day x 26 working days in the month = ₹ 9,750 a month. Additional ₹ 1430 house rent allowance / city compensatory allowance for urban workers. OR
    • Proposal 2: Indian states and union territories should be divided into 5 regions, and have separate regional minimum wages, such as
      • Zone1 (Assam, Bihar walla backward area): ₹ 8892/month
      • To…
      • Zone5 (Delhi, Punjab type small & developed regions with higher cost of living): ₹ 11,622/month
  • Link this minimum wages with Consumer Price Index (CPI: उपभोक्ता मूल्य सूचकांक) inflation and update it every 6 months.

Code on Wages 2019

This new act aims to merge the existing Minimum Wages Act, 1948, the Payment of Wages Act, 1936, the Payment of Bonus Act, 1965 and the Equal Remuneration Act, 1976 into a single Code on Wages  (वेतन कोड/ संहिता), with following salient features

  • Union government will decide the minimum wages for banking insurance and other notable sectors;  state government will decide the minimum wages in the remaining sectors.
  • Union will setup a Central Advisory Body (केंद्रीय सलाहकार निकाय) → Regional Floor Wages (क्षेत्रीय न्यूनतम मजदूरी), for different geographical areas  → State cannot fix low wages than those floor wages.
  • These minimum wages norms will be revised every 5 years or less. हर 5 साल पर पुनः संशोधित किया जाएगा
  • Workers will have the right to overtime pay and bonus pay.
  • Gender discrimination is not allowed in wages. लिंग भेदभाव की अनुमति नहीं है एक समान कार्य के लिए एक समान वेतन महिला पुरुष और ट्रांसजेंडर को देना होगा
  • Jail and penalty if the employer is violating these norms.

ES19: Way forward beyond Code on Wages

In Economic Survey 2018-19 (ES19), Chief economic advisor (CEA) Subramanian K. observed that legal rights are meaningless until workers are aware about them, so,

  1. Spread minimum wages related information through computers, mobile phones, rural haats, TV-Radio-Massmedia. प्रचार प्रसार किया जाए
  2. Setup Digital dashboard to show updated minimum wages. USA has a special App for this purpose, And given the Modi government penchant for launching app with contrived abbreviations for every mundane thing, so, we should not waste one more second in launching this app.
  3. Easy to remember helpline / complaint number for the workers. E.g. South Africa: ‘Impimpi Alive’ system wherein workers can send anonymous SMS messages to Labour Department, and within 48 hrs, an inspector will come to the factory. शिकायत निवारण जल्दी से हो यह जरूरी है.
  4. Labour ministry should announced we punished “X” number of violators, so it puts fear into other employers, and discourages them from violating minimum wages.

Conclusion: Indeed minimum wage enforcement is important

Minimum wages is a subset of labour welfare policies. So we can always connect it with keyword such as inclusive growth, sustainable development, poverty removal, Social justice and accordingly we can make a conclusion linking them all:

  • India is witnessing a period of demographic dividend (जनसांख्यिकीय लाभांश).
  • But, even if the youth is equipped with vocational skills (व्यावसायिक कौशल) but unable to find well paying jobs, then such circumstances will breed social unrest and perpetuate social injustice. सामाजिक असमानता बढ़ाता है, बेरोजगार युवाओं को पत्थरबाजी और आरक्षण की लिए हिंसक आंदोलनों के लिए प्रेरित करता है.
  • SDG Goal #8 requires India to promote full and productive employment and decent work for all.
  • Therefore, establishing an effective minimum wage system is important for sustainable development and inclusive growth (सतत एवं समावेशी  विकास) .

Alternatively, you can make a conclusion on the line that “although for complying with the DPSP we have enacted multiple laws but successive Committees and economic surveys observed these laws have failed to bring about the change in letter and spirit so  aforementioned reforms are necessary.”


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2 Comments on “[Summary] Economic Survey 2019 Vol1Ch11: Minimum Wages for Inclusive Growth: UPSC Mains Answer-Writing”

  1. Sir, please cover all chapters of volume 1. I know its commercially not viable for you anymore.But there are many who need ur support

  2. Very helpful. Please try to complete volume 1 article within this week only

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