Stirling Smith, ETI trainer and blogger, looks at the possible implications of India's general election and clarifies the minimum wage in India.
Money, money, money
At the end of March my car was approaching the Indian city of Hyderabad when it was stopped by police. They opened the boot to check if l had any cash.
At election time, huge amounts of money are moved around to influence electors. It costs more to get elected to the Indian Parliament than to the US Congress.
As l am just a mere trainer, of course, the police found nothing.
However much the elections of cost, after weeks of campaigning and several rounds of voting, we now know which party will form the next government.
It's quite a coincidence. On the same day as millions voted in the elections for the European Parliament, the results of India's general election were announced.
The largest and second largest democratic elections in the world overlapped.
Many people dismiss the European Parliament elections as a meaningless exercise. You can't say that about Indian elections. For the next five years, the BJP government will be at the helm. And if you are sourcing from India, as many ETI members do, then the election result could have an impact.
Labour law reform revisited
One of the BJP’s commitments when it got elected back in 2014 was to streamline India's complex labour laws. In place of 44 different central labour laws (let's not go into the laws at state level), there were going to be just four codes covering occupational safety and health, wages, industrial relations and social security. You can find the drafts here
None of these draft codes have made it through Parliament in five years.
Streamlining labour law is sensible. In India, different provisions kick in a different levels of employment; there are different definitions of worker in different statutes.
Streamlining does not necessarily improve workers' position. Bangladesh went through a similar exercise of tidying up all the laws inherited from the British and Pakistan in 2006. But you could never argue that made things any better for workers.
A missed opportunity
Rationalising the law should be the time to improve standards. Take the law on safety. It's very similar to the situation in the UK pre the 1974 Health and safety at Work Act, which I blogged about a few years back.
Workers in factories are covered by the Factories Act. Workers in mines are covered by the Mines Act: especially if they are in coal mining; the situation in stone mines, what you and l would call quarries, is a bit more complicated. And there's not much coal in UK company supply chains, but plenty of stone. But there is a sort of coverage.
Workers in ports are covered by a specific act. And so on.
But these groups are like islands in a sea of non-coverage. If you aren't a factory worker, or miner, or docker, there is no safety legislation to protect you.
Nothing, for example, for the hundreds of sanitary workers who die in liquid poo every year.
Back in 1974, the UK law was rationalised, and all employers were given the responsibility: "It shall be the duty of every employer to ensure, so far as is reasonably practicable, the health, safety and welfare at work of all his employees”
And that indeed is the section of the act which is most used in prosecutions.
After the Bhopal disaster of 1984 India was offered a huge amount of help, including updating the law. A new draft was prepared, along the lines of the modern legislation in the UK, Sweden etc. I found it in the files of the Delhi ILO office when l arrived to work there in 1992.
But it got binned, sadly. I’m pleased to say that the new draft code does go some way in this direction.
Maybe the re-elected government will have another go at pushing through the draft codes, but labour law reform is unlikely to be a priority.
A new wages code would be handy.
Time to get technical. Regular readers know they can relax. This blog is the place to get ILO-ese explained in simple English.
Everyone is familiar with the concept of minimum wages. What the ILO Convention No. 131 (Minimum Wage Fixing) says is that governments should have a system of setting minimum wages; the ILO calls it wage fixing. It does not, of course, mandate what that level should be.
So, the central government fixes a minimum wage for its own employees. And each state sets a rate for all other workers in its boundaries. Or rather rates. Some states have ridiculously complicated minimum wages, for dozens of scheduled industries, with 20 or 30 jobs each having a minimum wage. And then there could be different rates for unskilled, semiskilled, skilled, and highly skilled.
And different rates for different parts of the state. I have seen books of 80 pages with all the possible variations. This confusion works very well for employers, of course.
Coin of the realm
A simple national wage cuts through all that. The draft code provided for a national minimum wage which would have been a floor. State governments could still fix minimum wages, but not below the national rate.
The other ILO convention on wages gets forgotten, but l think it is important. This is Convention No. 95 (Protection of Wages). India has not ratified this Convention, but there is a law on this dating back to the British period.
This is about things like getting paid in coin of the realm, not tokens with the employer’s logo on them, only usable at a shop controlled by the employer. This practise was widespread in Britain until the Truck Acts brought it to a stop.
You also want a law that defines wages periods, so workers are paid regularly. Not like the Chinese factory I went to, where workers were paid three times a year.
And proper wages slips.
All these protections should mean that the worker really does receive all the money they have earned.
Building a wages ladder
When I wasn’t smuggling money to fix the elections, I spent a lot of time on that March trip constructing wages ladders for two manufacturing clusters, in Rajasthan and in Kurnool. Yes, l know you never have heard of it. It's in Andhra Pradesh.
Sorry, that doesn't help, does it? Let's just go for southern India.
Wages ladders are a very useful tool to work out how good your supplier stands in relation to the Base Code clause 5 on wages.
I’ve got 20 rungs on the wages ladder I made for South India.
You can't tell your supplier how to run their business, including how much to pay workers. What you can do is understand the going rate, and where your supplier sits vis-a-vis the various benchmarks, or rungs in the ladder. You want workers at your supplier to be on the higher rungs of the ladder, not falling off the bottom.
It's not good enough for an audit report to say, yes, all workers get the minimum wage. Of course, you need to check they have not had to work overtime to get that minimum wage, which should be based on the standard working week for wherever you are. 48 hours in India, less in some other countries.
An island of legal low pay
But you need to look out for dodges like one l found in a supplier in India. It was situated in Pondicherry, a tiny former French enclave, with a different government from the surrounding very large state of Tamil Nadu.
This blog is becoming a geography lesson, isn't it?
The supplier carefully followed the minimum wage in Pondicherry. It just happened to be substantially lower that the minimum wage in Tamil Nadu. An island of perfectly legal low minimum wage surrounded by a higher minimum wage.
It was a deliberately engineered dodge to pay less.
A wages ladder would highlight that kind of practice.
At last! Clarity on the minimum wage
In January, a government commissioned report came out with a single national minimum wage. It had the snappy title of Report of the Expert Committee on Determination of Methodology for Fixation of National Minimum Wage/wages.
The committee that worked out the amount was chaired by a distinguished fellow of the V V Giri National Labour Institute, named after a trade union leader who became President of India. Another member of the committee was an ILO official. The report is a comprehensive treatment of the issue.
OK, it's not the law. But is gives you the benchmark, the critical rung in the wages ladder.
And the amount is...
Rupees 375 per day, or rupees 9,750 per month, based on July 2018 cost of living.
And the figure is quite close to the Global Living Wage Coalition's figure for a living wage in Uttar Pradesh, the largest state in India that has, to the surprise of the commentators, voted back the BJP.
In South India, in urban areas, the figure is higher, more than 560 rupees a day. Which you would expect.
What you need to do
I don’t write these blog posts for your edification, however interested you now are in Indian geography. So here is the simple message. Is your supplier paying all workers at least the credible, authoritative figure worked out by the government report?
375 rupees a day.
Not enough to swing an election. But it would make a real difference to a worker.