How is income driven in India

Unorganized Labour:

It is difficult to properly arrive at the employment quantities, under different categories in the unorganized sector. However, agriculture & related activities continues to be the dominating sector accounting for 70% of unorganized sector job. Construction would be the next most significant sector.

Organized Vs Unorganized:

The planned sector loves better conditions of work, cover under labour laws, is better unionized & most enjoy collective bargaining rights when compared to their unorganized sector counter parts. On the other hand, the amount of protection & trade union protection under the law designed for unorganized sector is limited: however, varies depending on extend of unionization/politics climate of their state. (Kerala/West-Bengal). In such instances they enjoy near equivalent protection.

Government workers, public sector and private sector:

Government employees enjoy high level of job coverage, trade union representation without collective bargaining rights.

Public Sector staff enjoy trade union and collective bargaining protection under the law.

Private sector workers enjoy trade union and collective bargaining rights like general public sector. Current style is to go to non-union workplaces.

Frame improve wage calculation:

Organized Sector:

The `day', `week' and `month' will be the basic systems for wages calculation - found in combination.

Normal working week is five days (for administration) five half days/ six days and nights.

`Hour' is generally not a device for wage calculation. (In newer sectors like IT, ITES hour is becoming a typical).

Wage payment is made monthly.

Unorganized sector:

`Day' is the common unit of calculation. In certain cases piece rate wages is in vogue, as well as hourly salary.

Wage categorization:

Minimum Income: - bare subsistence of worker, enough for health, efficiency and working potential.

Fair wage: Above minimum amount wage

Living wage: male worker not to give himself, but for family - not merely bare essentials but frugal comfort, education for children, communal security etc.

Need based minimal wage.


Fixation of salary in India is a recent phenomenon. There was no effective machinery till 2ns world warfare for settlement of disputes for fixation of wages. After independence of India, commercial relations turn into a major concern and there was a massive increase in industrial dispute mainly over wages leading to substantial loss of production. Knowing that industrial calmness is essential for improvement on industrial as well as the economical forward, the central federal government convened in 1947 a tripartite meeting consisting of representatives of employers, labour and federal.

Government of India produced industrial policy image resolution in 1948 where in fact the government has described two items which have bearing on wages:

Statutory fixation of least wages

Promotion of reasonable wages

To achieve the 1st objective, the bare minimum wages action of 1948 was approved to lay out certain norms and strategies for determination and fixation of pay by central and state government.

To achieve the second aim, GOI appointed in 1949 a tripartite committee on reasonable wages to find out principles which fair income should be fixed.

As of now, India doesn't have a formal national wage policy, though the concern has been mentioned several times. The government has direct and indirect control over income levels, which has been exercised through different companies. Income and salary incomes in India are fixed through several companies:

Collective bargaining

Industrial income boards

Government appointed pay commissions

Adjudication by courts and tribunals

Collective Bargaining:

Collective bargaining pertains to those arrangements under which pay and conditions of employments are usually decided by agreements negotiated between the parties. Generally speaking the following factors impact the wage dedication by collective bargaining process:

Alternate choices and demands

Institutional necessities

The right and capacity to strike

In a modern democratic society wages are dependant on collective bargaining in contrast to specific bargaining by working. In the matter of wage bargaining, unions are generally worried about:

General level of wages

Structure of wage rates (differential among occupations)

Bonus, incentives and fringe benefits, administration of wages

Wage conviction in the unorganized sector:

Wage perseverance in India has been achieved by various musical instruments. For the unorganized sector the most useful device is the Least Wages Work 1948.

This legislation governs the methods to fix minimum wages in appointed industries (which might vary from express to convey) by using the committee method or a notification method.

A tripartite Advisory Committee with an independent Chairman advises the Government on the least wage. In practice unfortunately, the minimum wage is so low that in many establishments there exists erosion of real income despite revision of the least wage sometimes.

A feeble indexation system has now been released in a few states only.

Collective bargaining in the structured sector:

An essential aspect that is not much identified, but which still prevails in many sorted out sector units is correcting and revising pay through collective bargaining.

The span of collective bargaining was affected in 1948 by the recommendations of the Good Wage Committee that reported that three levels of wages can be found - minimum, fair, and living.

These three income levels were described and it was pointed out that all sectors must pay the least wage and this the capacity to pay would apply only to the fair income, that could be associated with productivity.

In addition to the the fifteenth Indian Labour Conference, a tripartite body, attained in 1954 and defined precisely what the needs-based least wage was and exactly how maybe it's quantified by using a balanced diet graph.

This gave a great boost to collective bargaining; many sorted out sector trade unions were able to achieve reasonably acceptable indexation and something of paying an twelve-monthly bonus.

It is currently the law, that a thirteenth month of wage must be paid as a deferred income to all those included in the Payment of Bonus Act.

Industrial Wage Boards:

Concept of wage board was initially enunciated by committee on reasonable wages. It was commended by first five season plan and second five calendar year plan also considered wage board as an acceptable equipment for settling wage disputes. Wage boards in India are two types:

Statutory wage board

Tripartite board

Statutory wage plank is a body setup for legal reasons or with legal power to establish bare minimum pay and other expectations of employment that happen to be then lawfully enforceable in particular trade or industry to that your board's decisions relate.

Tripartite wage mother board is a voluntary negotiating body create by discussions between organized employers, staff and government to regulate wages, working hours and related conditions of career.

Wage board decisions are not last and are subjected to either professional or judicious review or reconsideration by other specialist or tribunals. The forces and procedure of wage planks are identical to professional tribunals instituted under the Identification act 1947

Pay Commissions:

First pay commission rate was appointed by GOI in 1946 to enquire into the conditions of service of central government employees. This commission payment in its statement said that in no circumstance should they pay less than a living wage.

The 2nd pay commission rate was appointed in August 1957; it examined the norms for correcting a need structured minimum wage setup.

GOI appointed another pay commission payment in the 1970's which in its article portrayed support for a system in which modifications of pay will happen automatically with upward motion in consumer price index.

The 4th pay percentage emerged in 1983 to examine the structure of all central authorities employees, including those of union territories, officers belonging to the military and everything India service. Fee submitted a written report that recommended extreme changes in pay level.

The 5thpay commission payment 1996 made sure advice regarding restricting of pay scales.

The 6th pay commission rate was proven in 2006 which submitted a report recommending revision of Pay scales of employees of Autonomous systems.


This instrument is utilized for settlement deal of any income related disputes through courts and tribunals. Supreme Judge has also adjudicated upon such disputes.

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