The concept of “Minimum Wage” stands for different standard of different countries.

The fair wage committee in India

has observed that in India the level of the national income is so low at present that it is generally accepted that the
country cannot afford to prescribe by law a minimum wage must provide not merely for the bare sustenance of life but
for the preservation of the efficiency of the worker. Thus, a minimum wage is one, which may be sufficient to enable
worker to live in reasonable comfort having regard to all obligations to which an average worker would ordinally be
subject.
Principles of Wage Determination
As the major production cost, wages affect profits, business investment, competitiveness, and are a cost push inflationary
factor. As the major income in the economy, wages affect standard of living, income distribution and poverty, and
demand pull inflation.
At the source of wage disputes is the employer treating wages as their major cost, and the employee viewing wages as
their major income.
The following principles have always been the bases of the wage determination process. All are economically valid. At
different stages they have collectively, and singularly, been used to determine wage increases.
1. Preserving real income: This is the argument used by employees and Unions viewing wages as an income. Following
this principle usually results in wages being indexed to inflation. In periods of rising inflation, indexation becomes a
problem of an institutionalised wage-price spiral. Underlying aspects that have also impacted on real wage preservation
arguments have been a "basic" minimum wage, and comparative wage justice.
2. Labour productivity: A valid economic theory connects wages to labour productivity. Conflict arises over the
measurement of productivity. Rewarding labour with a wage increase when technology, and/or capital investment,
increases labour efficiency may not be justified.
3. The capacity of business to afford wage increases: This emphasises wages as a cost of production, and the threat of
wage increases to squeeze profits. This "capacity" argument is that followed by business owners.
4. The capacity of the Economy to absorb wage increases: This "capacity" argument views the macro impact of wage
increases on inflation, competitiveness, and other aspects of internal and external balance; as well as the affect on
business profits and investment from 3. This is the main argument of the Federal Government recognising the macro
policy potential of an Incomes Policy to address external and internal balance goals to supplement demand management
policies, and the effects on income distribution.
The Methods of Wage Determination
Generally wage determination can be through a centralized, regulated, institutionalized system, or a decentralized
system. Collective bargaining is when workers with similar employment conditions and skills unite, usually through a
union, to present their wage demands to their employer(s). Enterprise bargaining is when workers at the same plant
bargain with the employer. An award is an agreement that sets out both wages and working conditions. Our reliance on a
centralised system, often based on indexation, has dominated wage determination over the last century.
Fixation of Minimum Wages in India: The minimum wages covers all workers in the sectors agricultural, industrial
and small-scale sectors. This means: farm labourers landless labourers factory workers people working in cottage
industries construction workers etc. The issue of fixation of minimum wages is of primary importance in a country like
India where 300 million people are employed in the informal sector with no collective bargaining power. This is 93
percent of the workers.