Main Objectives of National Wage Policy

One of the objectives of economic planning is the raising of the standard of

living of the people. This means that the benefits of planned economic
development should be distributed among the different sections of the
society.
Therefore, in achieving a socialistic pattern of society, the needs for proper
rewards to the working class of the countryman never is over emphasised.
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.
. To eliminate malpractices in the payment of wages.
!. To set minimum wages for workers, whose bargaining position is weak due
to the fact that they are either un"organised or inefficiently organised. #n
other words, to reduce wage differential between the organised and
unorganised sectors.
$. To rationalise inter"occupational, inter"industrial and inter"regional wage
differentials in such a way that disparities are reduced in a phased manner.
%. To ensure reduction of disparities of wages and salaries between the
private sector and public sector in a phased manner.
&. 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.
'. To provide for the promotion and growth of trade unions and collective
bargaining.
(. To obtain for the workers a just share in the fruits of economic
development.
). To avoid following a policy of high wages to such an e*tent that it results
in substitution of capital for labour thereby reducing employment.
+. To prevent high profitability units with better capacity to pay a level of
wages far in e*cess of the prevailing level of wages in other sectors.
,.To permit bilateral collective bargaining within national framework so that
high wage islands are not created.
.To encourage the development of incentive systems of payment with a
view to raising productivity and the real wages of workers.
!.To bring about a more efficient allocation and utilisation of man"power
through wage differentials and appropriate systems of payments. #n order to
achieve the above objectives under the national wage policy, the following
regulations have been adopted by the state-
. .rescribing minimum rates of wages.
!. /ompulsory conciliation and arbitration.
$. 0age boards.
. 1inimum 0ages-
#n order to prescribe the minimum rate of wages, the 1inimum 0ages Act,
+%) was passed. The Act empowers the government to fi* minimum rates of
wages in respect of certain sweated and unorganised employments. #t also
provides for the review of these wages at intervals not e*ceeding & years.
!. /ompulsory /onciliation and Arbitration-
0ith the object of providing for conciliation and arbitration, the #ndustrial
2isputes Act +%( was passed. #t provides for the appointment of #ndustrial
Tribunals and 3ational #ndustrial Tribunals for settlement of industrial
disputes including those relating to wages.
$. 0age 4oards-
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.