Wage policy, Wage determination, Wage boards

A national wage policy, thus aims at establishing wages at the highest possible level, which the economic conditions of the country permit and ensuring that the wage earner gets a fair share of the increased prosperity of the country as a whole resulting from the economic development.

The term “wage policy” here refers to legislation or government action calculated to affect the level or structure of wages or both, for the purpose of attaining specific objectives of social and economic policy.

1. To eliminate malpractices in the payment of wages.
2. To set minimum wages for workers, whose bargaining position is weak due to the fact that they are either un-organised or inefficiently organised. In other words, to reduce wage differential between the organised and unorganised sectors.
3. To rationalise inter-occupational, inter-industrial and inter-regional wage differentials in such a way that disparities are reduced in a phased manner.
4. To ensure reduction of disparities of wages and salaries between the private sector and public sector in a phased manner.
5. To compensate workers for the raise in the cost of living in such a manner that in the process, the ratio of disparity between the highest paid and the lowest paid worker is reduced.
6. To provide for the promotion and growth of trade unions and collective bargaining.
7. To obtain for the workers a just share in the fruits of economic development.
8. To avoid following a policy of high wages to such an extent that it results in substitution of capital for labour thereby reducing employment.
9. To prevent high profitability units with better capacity to pay a level of wages far in excess of the prevailing level of wages in other sectors.

10.To permit bilateral collective bargaining within national framework so that high wage islands are not created.

11.To encourage the development of incentive systems of payment with a view to raising productivity and the real wages of workers.

12.To bring about a more efficient allocation and utilisation of man-power through wage differentials and appropriate systems of payments. In order to achieve the above objectives under the national wage policy, the following regulations have been adopted by the state:

1. Prescribing minimum rates of wages.
2. Compulsory conciliation and arbitration.
3. Wage boards.

1. 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 unorganised employments. It also provides for the review of these wages at intervals not exceeding 5 years.

2. 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.

3. 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.