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Minimum-Wage Criteria Provide A More Realistic Poverty Line

Updated: November 19, 2011 4:54 pm

What has been missing in the heated debates about the poverty line is a clear enunciation of which basic needs should be included. The 15th Indian Labour Conference of 1957 might have come up with the most comprehensive criteria for defining the minimum wage required to meet basic needs, writes Kathyayini Chamaraj

Several deaths of children due to malnourishment have been reported from several districts of Karnataka in recent months. Even while these were being reported from a state considered one of the glorious success stories of the ‘growth’ saga since the 1990s, the Planning Commission (PC) was tying itself in knots trying to justify to the Supreme Court its poverty lines of Rs 20/person/day in urban areas and Rs 15 for rural areas at 2004 prices. The Scrooge-like statistical experts in the Planning Commission believed—until they were made to retract their ridiculous computations by public pressure—that these amounts were “good enough” and that such decisions were taken on the basis of “empirical and statistical data” and hence must be left to the judgement of experts. Obviously, the experts knew better than the aam aadmi how much he needed to live a decent life!

Pushed into a corner by the criticism, the Deputy Chairman of the Planning Commission has distanced himself from the figures (as determined by the Tendulkar Committee and not the Planning Commission) instead of owning and defending them, surely an abdication of the role and responsibility of the Planning Commission in setting the norms for these important figures for the country as a whole.

The experts did a lot of arcane number-crunching to claim the nutritional adequacy of their poverty line. “If you didn’t understand that, relax, because it makes no sense,” said Jean Dreze, the noted economist.

What has been missing in the heated debates about the poverty line is a clear enunciation of which basic needs should be included for the poverty line. Should it cover just a certain amount of calorific requirements, to the exclusion of other needed nutrients such as proteins, fats and micro-nutrients? Should it cover only food or also health and education as the Tendulkar Committee has postulated? Should it cover only food, health and education or also shelter, clothing, transport, fuel, recreation, ceremonies, etc? If it is to cover all the above basic needs, what would be the cost of obtaining these at current prices?

International definitions of the poverty line say that it should cover all basic needs. A Working Group set up in 1962 by the Government of India to define a poverty line defined a national minimum of Rs 20 per capita per month (Rs 25 for urban areas) at 1960/61 prices as adequate to ensure minimum food requirements and also minimum clothing and shelter. While accepting that health and education too form basic needs, it did not, however, compute the costs for these as it was assumed that health and education would be delivered free to citizens by the state, as required under the Constitution.

The most comprehensive criteria for covering all the basic needs were evolved by the 15th Indian Labour Conference (ILC) in 1957 for fixing minimum wages. The norms are that a need-based minimum wage for a single worker should cover all the needs of a worker’s family consisting of a spouse and two children below the age of 14 (considered as three consumption units—husband: one unit, wife: 0.8 unit and two children: 0.6 units each).

The food requirement was to be 2,700 calories, 65 grams of protein and around 45-60 grams of fat as recommended by Dr Wallace Aykroyd for an average Indian adult of moderate activity. Dr Aykroyd pointed out that animal proteins, such as milk, eggs, fish, liver and meat, are biologically more efficient than vegetable proteins and suggested that they should form at least one-fifth of the total protein.

Dr Aykroyd worked on nutrition for nearly 30 years and was director of the Nutrition Division, Food and Agriculture Organisation, United Nations. In 1935, he was appointed director of the government’s nutritional research centre in India, situated in Coonoor in the south.

The 15th ILC further resolved that clothing requirements should be based on per capita consumption of 18 yards per annum, which gives 72 yards per annum for the average worker’s family. For housing, the rent corresponding to the minimum area provided under the government’s industrial housing schemes was to be taken. Fuel, lighting and other items of expenditure were to constitute an additional 20% of the total minimum wage.

The Supreme Court upheld these criteria in the case of Unichoy vs State of Kerala in 1961. In the later Raptakos Brett Vs Workmen case of 1991, the SC went one step further, and held that besides the five components enunciated by the 15th ILC, minimum wages should include a sixth component, amounting to 25% of the total minimum wage, to cover children’s education, medical treatment, recreation, festivals and ceremonies. The SC also observed that a wage structure including the above six components would be “nothing more than minimum wage at subsistence level” which the workers must get “at all times and under all circumstances”.

One of the few efforts at bringing to light the cost at current prices of the above criteria fixed by the 15th ILC has been made by Ashim Roy, General Secretary of the New Trade Union Initiative (NTUI), in a paper published in 2009 titled, ‘A Just Minimum Wage’. The NTUI is an independent national trade union centre formally founded in 2006 and comprising several independent trade unions in the organised and unorganised sectors. Ashim Roy cites the Report of the Sixth Pay Commission which calculates the minimum wages as per the 15th ILC norms. The cost of food requirements alone as per the norms set by Dr Aykroyd and fixed by the 15th ILC come to Rs 5,018.79 per month for a family of four at 2009 prices. Taking other needs of shelter, clothing, education, health, fuel and recreation into consideration, as spelt out by the 15th ILC and the SC, the Sixth Pay Commission arrives at a monthly minimum of Rs 9,337 and a daily minimum wage for a worker at Rs 359.12 for a family of four at 2009 prices. This makes it about Rs 90 per capita/day and around Rs 130,000 per year for a family of four.

If salaried persons are entitled to these norms as per the Sixth Pay Commission Report, then all others are also entitled to it as per the 15th ILC and the SC. It is significant that the minimum wages for the poorest workers (including for the MGNREGA) are not even being considered along these criteria, let alone being paid along them.

It appears logical to infer that any family getting less than these amounts should be considered poor, as otherwise, one or other of its basic needs would not be met. Since the SC accepted this as the entitlement of each worker and his family, this has the force of law and has to be implemented. Any poverty line or law on nutrition security should be based on these norms if the intent is to banish malnutrition from the country. These amounts show how inadequate and irrational the current poverty levels fixed by the Planning Commission and several states are. How many families in the country earn Rs 130,000 per year? The Rs 32/capita/day at current prices fixed by the Planning Commission for urban areas is about three times less than Rs 90 and the Rs 26/capita/day for rural areas is less than a third of this figure. Hence this is a case for the universalisation of the PDS.

If at all it is necessary to fix an income criterion for deciding who is BPL, one has to accept that the need-based minimum wage level as per the 15th ILC should be the criterion. The People’s Union for Democratic Rights (PUDR) has in a recent statement also demanded that the minimum wage level recommended by the 15th ILC should be the poverty line.

George Kent, a food rights expert, says that the dominant view under international human rights law is that the primary obligation of the state is to create the conditions in which all human beings can live a decent life, providing for themselves (emphasis added) and that the obligation of the state to provide food directly applies only when people are unable to provide for themselves through no fault of theirs. Crucial in this is the number of days of employment available to a person (at least 300 needed) and whether minimum wages enable him to fulfil all his family’s basic needs if he works for eight hours a day. The truth is that the country does not create the conditions in which people can provide for themselves, making it imperative for the state to step in for them.


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