Moneylife article: Universal Basic Minimum Income

Universal Basic Minimum Income: 

Are we clear about the concept?*

MG Warrier

Article 39 of the Indian Constitution mentions certain principles of policy to be followed by the State, including providing an adequate means of livelihood for all citizens, equal pay for equal work for men and women, proper working conditions, reduction of concentration of wealth and means of production from the hands of a few, and distribution of community resources to ‘subserve the common good’, Constitutional objectives of building an egalitarian social order and establishing a Welfare State by bringing about a social revolution assisted by the State and have been used to support the nationalization of mineral resources as well as public utilities. Further, several legislations pertaining to agrarian reforms and land tenure have been enacted by central and state governments, in order to ensure equitable distribution of land resources.

Universal  basic minimum income

The proposal to accept Universal Basic Income (UBI) as one of the themes for the forthcoming Economic Survey should be seen as an effort to pursue further the spirit of the directive principles of state policy referred to above and re-dedicate budget exercise as a tool for ensuring distributive justice, which is a responsibility emanating from the constitutional provisions. Once the debate on UBI picks up, the various components of such a concept, adequacy of the present levels of minimum wage, the path towards ‘living wage’, the relationship between wage and savings, savings and social security, wage and healthcare and education expenditure in low income groups and so on will surface.

So far, discussions on such issues were isolated or confined to academia or research efforts. For India, once the political leadership gets convinced about a realistic UBI, resources will not be a problem. One possibility is, some vested interests will hijack proposal of UBI to mix it with “unemployment dole”, an unhealthy practice existing in developed countries. While this should be avoided, care should also be taken to ensure that where employment assurance schemes are implemented, the compensations should be realistic.

There are several pockets in India, including many in states like Kerala, local population has successfully eliminated poverty and come up with regard to crucial human development indicators. Attribute it to militant trade unionism or the color of the flags held by parties in power, the credit for this goes to the insistence by workers for a minimum basic wage. 
Hopefully, the concept of  Universal Basic Minimum Income, as the debate picks up, will result in  healthy deliberations on the need for grassroots level improvements in income distribution to ensure sustainable economic growth. A pragmatic approach to sharing of wealth can reduce several security concerns world over and ensure better living conditions, not only for the deprived class, but for many from the rich and the powerful who feel insecure today.

Writing in The Hindu on September 1, 2016, G Sampath raised the question, “Do we need a minimum wage law?”. He went on to explain the concepts of living wage, fair wage and minimum wage and debated the seriousness with which stakeholders are approaching these concepts. One has to concede that it is a farce to retain the concept of minimum wage which does not ensure an income for the worker (who works full-time) which helps him and his dependents survive with some savings left for the family’s social security needs. The present levels of minimum wages ranging from Rs1,650 per month (Puduchery, agriculture) to Rs 9,100 per month (The minimum wage of Rs 350 per dium for unskilled non-agricultural worker announced by GOI in August 2016), do not reach anywhere near the cost of 5 components mandated by the 15^th Indian Labour Conference (1957) which were:

i)                   The wage must support three consumption units (individuals)

ii)                 Food requirements of 2,700 calories per day

iii)               Clothing requirements of 72 yards per year per worker’s family

iv)               Rent for housing area similar to that provided under the subsidised housing scheme and

v)                 Fuel, lighting and miscellaneous items of expenditure to constitute 20 per cent of the minimum wage.

It may be recalled that the Seventh Pay Commission had fixed minimum wage for central government employees at Rs 18,000. 

Viewed in the above context, GOI will have to concede at some stage the demand for some reasonable relativity for wages of the workers in the unorganised sector with the entitlements of workers in the organised sector having comparable responsibilities. Whenever specific issues relating to job security and compensation are raised by unions or external agencies in the context of human development indicators in India showing uncomfortably low levels in comparison with similarly placed developing countries, some sporadic initiatives are taken by Centre or state governments. One such initiative is the introduction of the concept of ‘full-benefit fixed-term jobs’ in the labour-intensive garment sector by Modi government recently (See box “Fixed term employment going to become reality” on page 64, Business Manager, September 2016). But, a comprehensive legislation covering all aspects of service in the unorganised sector is not yet thought of. To answer the brief question “Do we need a minimum wage law?”, the answer is in the affirmative, as we need it to know the extent of aberrations and violations and for further refinements to think of a ‘living wage’ at the appropriate time. During 20^th Century, we used Railway Time Tables to know the number of hours by which some trains were running late!

Time is opportune to revisit the prices, wages and income policy. If we do not do this, labour migration issues within the country and flight of skills and expertise from India may rise to unmanageable levels giving rise to several social problems. The revamp of prices, wages and income policy need to be done quickly and for making the processes transparent and findings and subsequent action plans acceptable for the stakeholders, there should be meaningful debates in legislatures and with users of services of workers. 

Strikes like the one on September 2, 2016 should be seen as symptoms of growing labour unrest and should be an ‘eye opener’ for initiating corrective action. Protests like this should not be evaluated on the basis of success and failure or losses and gains. Simmering discontent in the workforce emanating from the feeling that there is exploitation by the users of services, taking advantage of the helplessness of the workers, affect productivity and can have long term negative impact on economic growth. Sooner the governments and corporates amend the present approach, the better for the country.

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 *Submitted version of article published at moneylife.in on November 8, 2016