The wage boards are tripartite in character having representatives of workers, employers, and independent members participate and finalize the recommendations. The utility of such boards in the present context is debatable.
A wage board is a statutory body established by the government to tackle the disputes relating to the employers or the employees.
A Wage Board is a tripartite body with representatives of management, and workmen, presided over by an independent person nominated by the Government. The Board is required to fix wages in accordance with the principles of wage fixation.
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1. Introduction to Wage Board 2. Meaning of Wage Board 3. Concept 4. Objectives 5. Growth and Development 6. Working.
Wage Board: Meaning, Concept, Objectives, Growth and Development and Working
Wage Boards – Introduction
After independence, for about two decades, the organized labour sector was at a nascent stage of its development without adequate unionization. Trade unions were not as powerful as they are now, and unions had inadequate bargaining power. The government, aware of the problems which arise in the arena of wage fixation due to the absence of bargaining power, constituted various wage boards.
The wage boards are tripartite in character having representatives of workers, employers, and independent members participate and finalize the recommendations. The utility of such boards in the present context is debatable. Except for the wage boards for journalists and non-journalist newspaper and news-agency employees, which are statutory wage boards, all other wage boards are non-statutory in nature. Therefore, recommendations made by these wage boards are not enforceable under the law.
The importance of non-statutory wage boards has consequently declined over a period of time and no non-statutory wage board has been set up after 1966, except for the sugar industry, where such a wage board was constituted in 1985. The trade unions, having grown in strength in these industries, are now capable of negotiating their wages with the management. This trend is likely to continue in the future.
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A wage board is a statutory body established by the government to tackle the disputes relating to the employers or the employees.
In 1931, the Royal Commission on Labour recommend the setting-up of Wage Boards for determination of wages.
In March, 1957 the first Wage Board was constituted for the cotton textile industry later on subsequently Wage Boards were also constituted for sugar, cement, tea, coffee, rubber plantation, iron and steel industry, respectively etc.
The structure of a wage boards constitutes Chairperson, an equal number of representatives of employers and employees (two members each) and two other independent members (an economist and a consumer’s representative) nominated by the Board.
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The Chairman shall be appointed by the Appropriate Government in consultation with the Chief Justice of the High Court concerned or Supreme Court of India, as the case may be. An eligible person who is or has been or is eligible to be appointed as a Judge of the High Court shall be qualified for appointment as the Chairman.
It has been the practice to nominate a Member of the Parliament to represent the interests of the consumer/ public. The members representing the employees shall be appointed by the Appropriate Government on the recommendation of the most representative organisations of the employees for the further the proceedings.
Wage Boards – Meaning
A Wage Board is a tripartite body with representatives of management, and workmen, presided over by an independent person nominated by the Government. The Board is required to fix wages in accordance with the principles of wage fixation.
The Wage Boards help to resolve the disputes in a democratic manner by bringing the parties together, without compulsion on either side. It may, however, be pointed out that a Wage Board can only make recommendations, as there is no legal sanction behind it. But for all practical purposes, a Board’s recommendations are regarded as awards, and if unanimous, are made binding on the parties.
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The first wage board was set up in 1957 in the Cotton Textile Industry. Following this, Wage Boards were set up for working journalists, sugar, cement, jute, tea plantation, rubber and coffee, coal mining, iron and steel, road transportation and electricity undertakings.
The wage boards have, however, been criticised on the following counts:
i. The recommendations of the Boards have no legal sanction so that the parties are not bound to accept them.
ii. Very often the recommendations of the Boards are results of compromise decisions and cannot therefore become consistent long range wage policy.
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iii. When the Government has to legislate for giving effect to the recommendations of a Board, as it happened in the case of the Textile Board award, the element of compulsion is brought back, and that militates against the very spirit of such boards.
iv. Since the members of the Boards are not always the true representatives of the employers and workers, individual units are led to doubt the bona fides of the members.
v. The Boards often make recommendations on all-India basis, with the result that at times the special problems relating to any particular region may be ignored.
vi. The time lag between the making of the recommendations and their implementation is generally very great.
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Some people have suggested that Wage Boards should be made statutory bodies. They can probably be used as potent agency for collective bargaining in units which are in favour of this method of wage fixation.
Wage Boards – Concept
The concept of Wage Boards for determining and or fixing the wages of the workers in different industries was developed during the First Five Year plan. The objective of the wage boards is to resolve disputes on wages between the management and the workers. With this objective the Government decided to set up wage boards on an industry-wide basis.
The first Wage Board was set for the textile industry in the year 1957. Thereafter number of wage boards for different industries have been set-up. These boards are appointed by the Government purely on an adhoc basis on the demand of the Trade Unions and employers. The success of the first wage board led to it becoming a machinery for fixation of wages in India.
The National Commission on Labour in its report submitted in 1969, recommended that the wage boards should – (i) create a climate for harmonious industrial relations; (ii) safeguard the interests of the community and to represent consumer’s interests; and (iii) derive standardised wage structure for the concerned industry. However, these recommendations have yet to be followed.
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The composition of the Wage Boards is Tripartite, i.e.; it comprises of the representatives from industry, trade unions and the Government. A wage board is a non-statutory body comprising of equal number of representatives of the employers and the employees or their trade unions who are appointed by the Government and it is chaired by a serving or retired judge who is a Government nominee.
The Wage Boards start their work by issuing a detailed questionnaire to collect information, makes its own assessment on the basis of the views of different parties, and thereafter makes its recommendations with regard to suitable wage structure.
The wage structure suggested by the wage board is in operation for five years, although the parties – the management and the trade unions – are not bound statutorily to follow the same with regard to their organization.
However, it has been observed that the management of the companies prefer to follow the same, otherwise the trade unions take to strikes and other means to get the recommendations implemented.
The wage boards make recommendations to the Government and then the Government asks the parties to implement them.
The wage boards while determining the wage structure for a particular industry, uses the following factors:
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(i) Need-based minimum wage
(ii) Industry’s capacity to pay
(iii) Productivity of labour
(iv) Prevailing rates of wages
(v) Level of national income and its distribution
(vi) Place of industry in the economy of the country
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(vii) Needs of industry in developing economy
(viii) Requirements of social justice; and
(ix) Adjustment of wage differentials in such a manner as to provide incentives for skill formation.
The wage boards do not use job evaluation as the basis for refixation of existing wage structure. The argument is that the existing wage differentials have been determined by custom and usage, local circumstances, experience in working over a number of years, awards and agreements, etc., which would be disturbed by job evaluation.
Thus the wage differentials have remained limited to – (a) standardisation of occupational nomenclature, and (b) classification of various occupations into different types and fixing wage rates for each of these occupations. However, this has resulted in different wages for same skills in different industries.
It is suggested that the Wage Boards should, as far as possible, use job evaluation as the basis for determining the wage structure in an industry and at the same time should keep in view the prevailing practices in neighbouring industries.
Wage Boards – 8 Important Objectives
To achieve the following objectives the Wage Board was set-up:
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1. To align the wage settlements with the social and economic policies of the Government.
2. To represent consumers/public the interests.
3. To standardise wage structure throughout the industry concerned.
4. To provide better climate for industrial relations.
5. To work out wage structure based on the principles of fair wages as formulated by the Committee on Fair Wages,
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6. To work out a system of payment by results.
7. To evolve a wage structure based on the requirements of social justice.
8. To evolve a wage structure based on the need for adjusting wage differentials in a manner to provide incentives to workers for advancing their skill.
Wage Boards – Growth and Development in India
The history of wage boards in India dates back to the 1930’s. The Royal Commission on Labour recommended the setting up of tripartite boards in Indian industries. It said: we would call attention to certain cardinal points in the setting of (wage- fixing) machinery of this kind.
The main principle is the association of representatives of both employers and workers in the constitution of the machinery. Such representatives would be included in equal members, with an independent element, chosen as far as possible in agreement with or, after consultation with, the representatives of both the parties. Take decisions regarding wage adjustments suo motu or on reference from parties or from the government.
No action was taken during that plan period. However, the Second Plan emphasized the need for determining wages through industrial wage boards. It observed the existing machinery for the settlement of wage disputes has not given full satisfaction to the parties concerned.
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More acceptable machinery for settling wage disputes will be the one which gives the parties themselves a more responsible role in reaching decisions. An authority like a tripartite wage board, consisting of an equal number of representatives of employers and workers and an independent chairman, will probably ensure more acceptable decisions.
Such wage boards should be instituted for individual industries in different areas. This recommendation was subsequently reiterated by the Indian Labour conference in 1957 and various industrial committees. The government decision to setup the first wage board in cotton textile and sugar industries in 1957 was also influenced by the Report of the ILO.
The appointment of a wage board often results from the demands for labour unions. It has been reported: The formation of wage boards in all industries has been the result of demands and pressures on the part of trade unions. In their efforts to secure the appointment of wage boards, trade unions have to re pressurize not only the government but also the employers whose formal or informal consent to their establishment must be obtained.
In India, the Bombay Industrial Relations (Amendment) Act of 1948 may be regarded as perhaps the earliest legislation included a provision for the establishment of wage boards in any industry covered by the act. Accordingly, the first wage board was set up in Bombay for the cotton textile industry. The principal purpose of starting wage boards was to relieve the Industrial Courts and Labour Courts of a part of their adjudication work.
Wage Boards – Working (With Steps and Reasons)
Although wage boards are set up by the government, the basic reason for their establishment is the pressure brought to bear on the government, by the trade unions, industrial federations and national organizations. Pressure has been used for the appointment of wage boards for the jute industry by the jute workers association and for the coal mining industry by their trade union.
The formation of wage boards in other industries has been the result of similar demands and pressures on the part of trade unions – such as plantations, iron and steel, engineering, sugar, and electricity. The government cannot appoint members of the wage boards in an arbitrary way.
Independent members can be appointed only with the consent of employers and employees. The representatives of employers on wage boards are the nominees of the employer’s organisation and the workers representatives are the nominees of the national organisation of trade unions of the industry concerned.
However, before their actual appointment, a great deal of negotiations takes place not only between the two main reluctant interests but also among different groups representing particular interests. Item to be included for the consideration of the wage boards are the outcome of the negotiations between the parties.
The issues are unanimously determined by trade unions and employers; but these invariably relate to gratuity, bonus, hours of work and grant of interim relief. The quantum of interim relief is also decided by negations and bargaining which have sometimes resulted in temporary deadlocks.
The board functions are stated in three steps:
1. The first step is to prepare a comprehensive questionnaires designed to collect information on the prevailing wage rates and skill differentials, means of assessing an industry paying capacity and workloads, prospects for industry in the immediate future, and regional variations in the prices of widely consumed consumer goods. The questionnaire is sent out to labour unions, employers associations, interested individuals, academic organizations and government agencies.
2. The second step is to give a public hearing at which leaders of labour unions and employers associations, not represented on the board, as well as others interested in the industry in question are given a verbal or oral bearing on issues dealing with wages, working conditions and other items.
3. The third step is to convene secret sessions at which members of the board make proposals and counter – proposals regarding the items covered under the terms of reference. In the case of failure to reach a unanimous decision on issues, each party has the right to veto the others decision.
The role of independent members on the board is limited to conciliation and mediation; they try to prevent deadlocks by promoting communication between labour and management representatives. They also offer advice and suggestions to the parties, but the final decision must result from the parties’ give-and – take attitudes and compromises.
The decision – unanimous recommendations – is written down in the form of a report and submitted to the government, which usually accepts unanimous agreements, although it may modify any provisions thereof. Then the report is to be complied with by the parties. The government has no legal powers to enforce the board’s recommendations.
It tries to persuade the parties to narrow their differences and aim to unanimity. Wage boards like their own time in the submission of reports, e.g., the second wage board for cement and the first wage board for cotton textiles and sugar took a little less than. years; while the wage board for coal mining, non-journalists, jute, iron and steel took a little over 3 years; that for tea plantations took 5 ½ years and for coffee plantation 4 years and iron ore mining 5 years.
Some of the wage boards constituted in 1964 did not submit reports even by 1969, e.g., heavy chemicals, fertilizers, engineering industries and ports and docks. The average time taken by wage boards in the finalization of their deliberations varies from 3 years to 5 ½ years.
The main reasons for the delay in the completion of wage boards’ work have been:
1. Routine delays in the recruitment of staff; preparation and printing of questionnaires;
2. Getting replies to questionnaires;
3. Time involved in public hearings and
4. Lack of harmony among members in arriving at a decision.