Nos. 70 & 71, April 2018

Nos. 70 & 71 (April 2018)
India's Working Class and its Prospects

India's Working Class and its Prospects

V. Wage levels, product of historical development

As we saw above, Marx terms wages the ‘cost of reproduction of labour power’, i.e., the value of the means of subsistence necessary for maintaining the labourer, to restore him or her to work the next day, and to sustain a family. This is not, however, a fixed sum. Beyond the bare physical minimum, what each society considers that level to be has been arrived at through a historical process.

His means of subsistence must therefore be sufficient to maintain him in his normal state as a working individual. His natural needs, such as food, clothing, fuel, and housing, vary according to the climatic and other physical peculiarities of his country. On the other hand, the number and extent of his so-called necessary requirements, as also the manner in which they are satisfied, are themselves the products of history, and depend therefore to a great extent on the degree of civilization attained by a country; in particular they depend on the conditions in which, and consequently on the habits and expectations with which, the class of free workers has been formed. In contrast, therefore, with the case of other commodities, the determination of the value of labour-power contains a historical and moral element. Nevertheless, in a given  country at a given period, the  average amount of the means of subsistence necessary for a worker is a known datum.

The owner of labour-power is mortal. If then his appearance in the market is to be continuous, and the continuous transformation of money into capital assumes this, the seller of labour-power must perpetuate himself ‘in the way that every living individual perpetuates himself, by procreation’. The labour-power withdrawn from the market by wear and tear, and by death, must be continually replaced by, at the very least, an equal amount of fresh labour-power. Hence the sum of means of subsistence necessary for the production of labour-powr must include the means necessary for the worker’s replacements, i.e., his children, in order that this race of peculiar commodity-owners may perpetuate its presence on the market. (Marx 1990, 275)

Thus the price of labour power would vary from one society to another, and within a single society (by region or occupation). Since India’s working class was created under colonial rule, and the Indian economy was forcibly made an appendage of the British economy, did wages of workers in India rise to those of British workers? Obviously not, precisely because of the historical process by which the working class here was created:

Entering into these differences [between wages in different countries, regions, and occupations] are elements of force, politics, class struggle, and a long history of economic manipulation by those who hold the economic reins. Lurking behind, and incorporated into, today’s wages and wage differentials is the history of slavery and semi-slavery, and the exploitation of ethnic, national, racial and inter-regional disparities. This may not be easily discerned in the advanced capitalist nations where the creation of a wage-seeking labor force, along with its inner incongruities, evolved over centuries. But it should be more obvious as far as the areas of Western penetration are concerned, where a good deal of their capitalist history occurred in the last hundred years. Here, quite clearly, superior military power was the ultimate determining factor in obtaining the labor to dig the mines and harvest the plantation crops.... (Magdoff 1971)

Therefore we would expect that the costs of reproduction of labour power in India would be different from those of the advanced capitalist countries, and moreover that they would differ within India, among different occupations, and even different communities.

Low level of wages in Indian industry
The India Labour and Employment Report 2014 (ILER) calculates the proportion of Indian households whose per capita consumption falls below a World Bank norm of poverty.16 In fact, this cut-off is very low, reflecting near-destitution. (By comparison, the poverty line in the US is set at more than seven times this sum.) Nevertheless, the ILER finds that, in India’s urban areas, 16 per cent of regular worker households and 57.8 per cent of casual labour households fall below even this cut-off. (IHD 2014, 247)

Even to meet such low levels of consumption, it is frequently necessary for two adults to be working for pay, with the woman bearing the burden of housework in addition to her work outside the home. Hence we could consider each of the two wages to be below the level of ‘necessary labour’, the cost of reproduction of the labourer and his/her family. The concept of a ‘family wage’ was that a single worker’s wage would suffice to sustain the entire family. How do wages in India compare with this measure?17

India’s Seventh Central Pay Commission (7th CPC) calculated a need-based minimum wage according to recommendations of the 15th Indian Labour Conference  (15th ILC) of 1957, updated by a subsequent judgment of the Supreme Court. This minimum wage for a single worker is meant to cover all the needs of a worker’s family, including adequate food, clothing, housing, fuel, lighting, education, medical treatment, recreation, festivals, and ceremonies. The 7th CPC defines its aim as ascertaining “what the lowest ranked staff in government needs to be paid to enable him to meet the minimum expenditure needs for himself (sic) and his family in a dignified manner” (emphases added). It arrives at a figure of Rs 17,469 for the year 2014-15, which includes a component to account for the skill factor.18 The Commission report remarks:

From these numbers it is clear that benefits given to the lowest ranked government employees, whether monetized or not, are significantly higher than the minimum basic pay and also much higher than the emoluments of skilled industrial workers. To obtain a comparative picture of the salaries paid in the government with that in the private sector enterprises the Commission engaged the Indian Institute of Management, Ahmedabad to conduct a study. According to the study the total emoluments of a General Helper, who is the lowest ranked employee in the government is ₹22,579, more than two times the emoluments of a General Helper in the private sector organizations surveyed at ₹8,000-₹9,500. (GoI 2015, 64)

The 7th CPC figure includes a component for skills. But even if we stick closely to the 15th ILC formula, and do not provide for skills at all, we still arrive at a conservative need-based minimum wage (NBMW) of about Rs 16,000 per month for 2014-15.19

Let us now compare actual wages in the organised factory sector20 with our conservative NBMW of Rs 16,000. According to the Annual Survey of Industries (ASI), 2014-15, average monthly wages in the organised factory sector were Rs 10,885. If we take the corporate sector alone21, the average monthly wage comes to Rs 12,325. It should be noted that the average wage should be some multiple of the minimum, on account of the higher skill levels, and consequent higher pay, of a section of the workers. However, here we find the average wage is lower than the NBMW.  

Of the 10.75 million workers covered by ASI, 9.83 million, or 91.4 per cent, worked in industries where the average wage was less than our NBMW. The latter industries accounted for 76 per cent of the Gross Value Added of the factory sector. Even in the motor vehicles industry, average wages were just Rs 14,062. Apart from the refined petroleum products and basic metals industries, virtually all the industries had average wages below the NBMW.

The gap between our NBMW figure and the average wages in different industries is large. Let us take a much lower cut-off, of 75 per cent of the NBMW, i.e., Rs 12,000. Industries with average wages lower than Rs 12,000 accounted for 64 per cent of workers in the ASI factory sector. No doubt these are averages, indicating that there are workers who earn more than this level. However, we have so far ignored skill levels, which must also be taken into account in ascertaining the costs of reproduction of labour power (since such skills are acquired by workers through the expenditure of time and effort). Once we take these into account, the gap would increase even further. Today there does not appear to be a significant ‘labour aristocracy’ in India, in the sense of a section of the working class enjoying wages higher than ‘necessary labour’, and thereby sharing a part of the surplus.22

Moreover, these facts make a mockery of the incessant propaganda of the rulers and their economists, who counterpose the workers of the organised sector with those of the unorganised sector, and claim that legal protections for the former need to be done  away with for the sake of the latter. There are indeed divisions among the workers, with different sections being paid different wages for the same work, but the demand must be to raise the wages of the lower-paid workers to the level of the others.

It is clear that wages of most workers in the organised factory sector are insufficient to meet the minimum needs of a family to live in a dignified manner. These data relate to the organised sector units, which account for a small fraction of the total wage workers. The wages of the other workers would be lower than those of the organised sector. How do worker households survive on these wages?

Surviving on low wages
Part of the explanation is that the standard of living socially accepted in India, which has emerged historically, is lower than the norms adopted by the 7CPC for its formulation. Urban workers here have adjusted to living in abominable slums, traveling in intolerable conditions, and so on, which few workers from the present-day developed world would be able to survive, let alone tolerate.

A second explanation is that more than one member of the household works, implying an increased burden on the women in particular. A 2015 study of Bengaluru women garment workers found that their average monthly wage was Rs 7,066, out of a family income of Rs 13,816. (CWM et. al. 2015) In other words, despite two members of the family working, and despite the woman worker performing roughly two additional hours of domestic work a day beyond her factory hours, the family could not earn the NBMW of Rs 16,000 we cited above.

A third explanation is the subsidy from the subsistence agrarian sector that we mentioned above. Workers may obtain grain from the family’s farm plot. An article in this issue23 reports that a skilled garment worker in Gurgaon, earning about Rs 10,000 a month (including overtime), was only able to feed his family by supplementing his earnings with rations from the village. A sizeable number of Bengaluru garment workers travel to work daily from their villages in the periphery of the city. Some garment workers leave their children with the grandparents in the village. (Sharan 2014) Nationwide, commuter migration for work across the rural-urban divide is significant, exceeding 10 million people in 2009-10. (GoI 2017, 267) There is now also a substantial flow of women workers from the country’s poorest and most underdeveloped agrarian regions, such as Orissa, Jharkhand, Bihar, Madhya Pradesh, Assam and other Northeastern states. (ICN et. al. 2018; FIDH 2014) The migration of these women is circular, i.e., they return to their villages either annually or permanently after their stint in the city. However, it is reported that the employers make large deductions from their wages, which are in any case lower than the already low wages of local workers. Hence it appears they are unable to save much to send to the villages. This is even true of a substantial section of the local garment workers, who are predominantly tribals or members of oppressed castes from villages and hamlets around the city. The income they earn in the garment industry is so low that it does not enable them to acquire any permanent assets, and they are stuck on a circular treadmill between the village and  the city.24



16. Purchasing Power Parity (PPP) $2 per day, which means the goods and services that could be bought for $2 in the US. We cite this measure despite our reservations regarding it, and the procedure used to arrive at it. The World Bank also uses an even lower, and correspondingly more absurd, level of PPP $1.25 a day. (back)

17. This question is raised by Nathan, op. cit. (back)

18. The 15th ILC had provided for housing expenses at 7.5 per cent of the total minimum wage. Fuel, lighting and other items of expenditure were to constitute an additional 20 per cent of the minimum wage. The Supreme Court, in a 1991 judgment, prescribed an additional 25 per cent of the above components towards children’s education, medical treatment, recreation, festivals and ceremonies. The Seventh Pay Commission slightly alters this formula, reducing certain provisions taking into account the expenses being incurred by the Government toward employees’ housing, education, medical treatment, etc., but adding 25 per cent to account for skills. (back)

19. If we take the Seventh Pay Commission’s figure for food, clothing and detergent (Rs 9,218), provide that fuel, lighting, and water charges make up 20 per cent of the total wage, and housing make up 7.5 per cent, we get a figure of Rs 12,714. To this we add an additional 25 per cent for children’s education, medical treatment, recreation, festivals, and ceremonies, giving us the figure of Rs 15,893 for 2014-15. (back)

20. Defined as manufacturing units employing 10 or more workers with the use of power, or 20 or more without the use of power. (back)

21. Public limited companies, private limited companies, Government undertakings, and public corporations. (back)

22. This is contrary to what Nathan, op. cit., argued regarding the conditions prevailing in 1987. (back)

23. Archana Aggarwal, “Simmering Rage”. (back)

24. See the article in this issue on Bengaluru garment workers. (back)



NEXT: Stratified, fragmented, dominated labour market


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