Epistemology of Minimum Wages: Exploring Ground realities through the Lens of Mine Workers

Whenever it is discussed about the minimum wage the neoclassical and Keynesian paradigm is discussed in the theoretical domain. But when it comes to the application of principles given by both of these paradigms at the ground, it becomes unpragmatic in a greater extent. This post is an attempt to describe the question of the minimum wage from the vantage point of mineworkers and their experiences around it.

Minimum wage is defined as the lowest amount of wage permitted by the laws for different kinds of productive activity. In most of the countries, minimum wage and macroeconomics go hand to hand. In fact, fluctuations in the minimum wage are very much dependent upon the macroeconomics of any country. The journey of minimum wage mainly started with industrialisation (colonisation) and gets legitimacy with the formation of trade unions and international organisations like ILO. The Global Financial Crisis (1929) and the alternatives provided by macro-economists in order to maintain the industrial relations is somehow perceived as the benchmark for the theoretical domain of it. John Keynes is still popularly discussed when it comes to the theoretical discussions on minimum wages. The four principles provided by him is still relevant for trade union movements. The four-popular principle that is discussed in the Keynesian paradigm are firstly, any increment should affect a sufficient number. Secondly, adjustment of minimum should be done on a regular basis. Thirdly, any increase in the amount of minimum wage should be done in accordance with the trend in productivity growth in addition to the inflation rate. Lastly, the wage should be increased at the level of the average wage so that the wage gap could be minimised. In contrary to this, the neoclassical paradigm has provided the principle of negative employment effect. In simple terms, it should be decided by the employee on the basis of the surplus amount earned at a particular time. This also claims that deciding minimum wages may cost a negative impact on the overall production. See also (Working Paper: The theoretical debate about minimum wages by ILO from https://www.econstor.eu/bitstream/10419/96384/1/glu-wp_no-6.pdf ).

Now, I would like to reflect minimum wage provisions in India through the case of mineworkers of Rajasthan. As per the constitution, every state government is eligible to make provisions on minimum wages if the industries or subjects come under its jurisdiction. As per 2018, the minimum wage in Rajasthan ranges between 213 rupees to 283 rupees depending upon the category of a worker. Currently, the government has divided workers into four major categories i.e. unskilled, semi-skilled, skilled and high skilled. But in reality, most of the workers are underpaid. Through the field experiences, I came to know that workers are being paid on the basis of minimum wages fixed under MNREGA which is below 200 in Rajasthan. The situation is worse in those mines where there is a tender system. Under the tender system of mines, most of the workers have to work more than 12 hours and they are paid equally devoid of their quality of work. The mineworkers under companies are in slightly better conditions and wherever labour unions are working honestly.

But the question is whether defining minimum wage can do everything or is there a need to focus more on proper implementations. Though there are several other models like that of Living Wage, which is focused upon providing wages to the labourers in accordance to the ‘minute value’ of the work and a standardised consumption in terms of money. But in all these models, social background is missed completely like caste. And in Indian reality, skills are very much defined through the traditional occupations of different castes. Wages played an important role in defining the financial status of a person and it is the skill which sets its foundation but sometimes it is the social position (like caste) which defines a person’s wage. The mining sector in India is considered to be an unsafe and unhealthy occupation. Therefore, in Indian reality mineworkers are mainly from historically, socially and economically disadvantaged groups i.e. mainly the Dalits and Tribes. Now, the question is whether the social deprivation should be given value while defining the minimum or living wages or it should be completely defined under the premise of macroeconomics.