Labour Bureau
Government of India
R E P O R T

ONEVALUATION STUDIES ON IMPLEMENTATION OF

THE MINIMUM WAGES ACT, 1948 

IN BIDI MAKING ESTABLISHMENTS IN
MADHYA PRADESH

CHAPTER VII

ENFORCEMENT OF THE ACT

7.1   INTRODUCTION

7.1.1   The enforcement of the statutory minimum wages poses a major challenge to the administrators of the Minimum Wages Act, 1948. The enforcement system can work efficiently only if workers are fully conversant with the provisions of the Act in general and have knowledge abouttheir entitled/prevalent rates of minimum wages in particular. Further, they should also be aware about the extent to which they can approach the enforcement officers to seek protection under the provisions of the Minimum Wages Act. The experience shows that most of the workers do not receive the minimum wages due to their ignorance, illiteracy and poor knowledge of the laws governing them. In fact, it was observed that limited resources for conducting the inspections, lack of bargaining power and unlimited supply of labour are serious obstacles in the way of administration of the minimum wages. However, to maintain credibility of the minimum wages programme, it is necessary to make to the extent possible, a realistic assessment of the pattern of compliance.

7.1.2    The Minimum Wages Act, 1948 provides for statutory fixation and revision of minimum rates of wages and prevention of exploitation of ‘sweated labour’ by fixing the minimum wage rates and guarding them vigilantly.The Appropriate Governments, Central or State, as the case may be, are responsible for enforcing the Act.The State Government is the Appropriate Government for enforcing the Act in respect of all the Scheduled Employments except in Mines, Oil fields, Major Ports and Corporations established by the Central Government falling under the Central Sphere.Accordingly, the State Governments fix, revise and enforce the minimum wages in the Scheduled Employments of Tobacco Manufactories including Bidi making.The provisions made under the Act relate to hours of work, overtime, weekly off, maintenance of records and registers, enforcement of the prescribed minimum wages, display of notices and abstracts and submission of annual returns. The Minimum Wages Act, 1948 does not have provision for registration of the establishments to which it applies.Consequently in case of Bidi industryit is usually enforced in the establishments registered under the Bidi and Cigar Workers (Conditions of Employment) Act, 1966. This Act provides for licensing of the establishments or ‘industrial premises’ engaged in any manufacturing process connected with the making of bidi or cigar or both.

7.1.3    In the bidi making establishments enforcement of the Minimum Wages Act, 1948 is mostly confined to the establishments falling under the Scheduled Employment `Tobacco (including Bidi Making) Manufactories’ licensed under the Bidi and Cigar Workers (Conditions of Employment)Act, 1966.The bidi making establishments working without such licenses do not receive the attention of the enforcement authority in the same measure.The extent to which the relevant Labour Laws have been implemented in the Bidi Making establishments in the State of Madhya Pradesh are discussed in the following paragraphs.

7.2   Wage Revisions     

7.2.1   The minimum wages fixed under the Act are required to be revised to neutralize the effects of price increase.The Act provides for revision of the minimum rates of wages once fixed at intervals not exceeding five years.In the initial stages of enforcement, the minimum wages once fixed were not revised for long periods. However, over the years due to increasing awareness about the need for revising minimum wages, in tune with increase in prices, the pace of wage revisions has increased.Many State Governments have linked minimum wages in the Scheduled Employments to the All-India Consumer Price Index Numbers (Industrial Workers) on half yearly or yearly basis.The state Govt. of Madhya Pradesh has also linked the minimum wages to the Consumer Price Index Numbers (Industrial Workers) 1960=100 with a provision for revising the same on an yearly basis.The minimum wage rates effective at the time of the studies are given in Table 7.1.

Table 7.1  Effective Wage Rates of Bidi Rollers for Rolling of 1000 Bidies Effective from 01/10/2000 (in Rs.) 

01
Basic Wage
22.50
02
Variable Dearness allowance
09.30
03
Leave with Salary

(@ 5 % of total wages )

01.59
04
Total Wages
33.39
05
Bonus

@ 8.33 % of Total Wages

02.78
06
P.F. contribution ofthe employer

(@ 10 % of total Wages )

03.33
07
Total Wages + Bonus + P.F. Contribution )

Less Contributionofthe employer( - )

39.50

03.33

08
Total Wages + Bonus
36.17
09
Less P.F. Contribution of employee 

(@ 10 % of Total Wages)( - )

03.33

10
Net Payableto Bidi Rollers
32.84

7.2.2   The discussion on wage revisions in the study was restricted to Bidi Rollers who constitute the majority of the employees. It was found that prior to 1953, the minimum wage rates for Bidi Rollers in Madhya Pradesh were fixed between Re. 0.62 & Rs. 1.37 per thousand bidis.The first wage revision under the Minimum Wages Act, 1948 was carried out in 1966 and the minimum wages were fixed between Rs. 2.00& Rs. 2.25 per thousand bidis. The latest wage revision had become effective from 1st October, 2000 vide notification No. 1/9/A/5597/32759-33288 dated 12.10.2000.The notification among other things, provides for a guaranteed Minimum wage of Rs.178.00 per week to the workers in case an owner was not issuing enough raw material ( Tendu leaves and tobacco) to roll 5600 bidis per week, and at the same time provides thatguaranteed minimum wage would not be providedto a worker who is not able to roll 5600 bidis per week. 

7.2.3    The revising of minimum wage rates are linked to 1206 points of the Consumer Price Index Numbers for Industrial Workers Base(1960=100) compiled by the Labour Bureau. Any increase over 1206 points of the CPI Numbers is being compensated at the rate of Re. 0.01 per point rise in the Index Numbers.This Variable Dearness Allowance is to be calculatedon 1st October of every year on the basis of the rise in the average Consumer Price Index Numbers (Industrial Workers) for the preceding Calendar year.Thus, compliance with the wage revision aspect of the Minimum Wages Act, 1948 was fairly satisfactory being similar to that of the organized industrial workers.

7.3   Enforcement Machinery

7.3.1   In Madhya Pradesh the Enforcement Machinery for implementation of the various labour laws was under the overall charge of the Labour Commissioner.He was assisted by an Additional Labour Commissioner; six Deputy Labour Commissioners; twelve Assistant Labour Commissioners; thirty five Labour Officers; an Assistant Director Information and Publications; a Law Officer; a Survey Officer; an Accounts Officer; a Women Social Worker; fifteen Labour Officers and 125 Labour Inspectors (Agriculture). The enforcement functions were carried out from the Regional Offices headed by an Assistant Labour Commissioner or a Labour Officer.

7.3.2   The Labour Inspectors visited and inspected factories and private dwellings of the Contractors to see whether the provisions of the Minimum Wages Act, 1948 and the Beedi and Cigar Workers (Conditions of Employment) Act, 1966 were being complied with or not.

7.3.3   The Central and State Labour Enactments including the Minimum Wages Act, 1948 are enforced by the Labour Department. The Department takes necessary steps to prevent strikes, lockouts and work stoppages, to settle industrial disputes through effective intervention and conciliation and to implement the recommendations of the Wage Boards and other Tripartite Bodies, to conduct elections to the Trade Unions and to bring about improvements in social and economic conditions of the workers.

7.4   Inspections

7.4.1   As per Section 19 of the Minimum Wages Act, 1948 the State Govt. appoints Inspectors for purpose of the Act and defines the local limits within which they shall exercise their functions.Normally the Assistant Labour Commissioners and the Labour Officers are responsible for carrying out the inspection under the different labour laws. The information pertaining to the inspection procedure; the number of inspections made in the establishments covered; the difficulties faced in the enforcement of the Act, and suggestions for improving the level of compliance with the provisions of the Act, was also collected during the course of Studies. It was observed that generally an Inspecting Officer was enforcing fourteen labour laws in his jurisdiction.The number of inspections carried out every month varied in all the Strata covered by the Study.On an average 83 inspections were carried out in a month under various labour laws by an Inspecting Officer whereas the average number of inspections conducted under the Minimum Wages Act, 1948 worked out to only 23.Thus, the proportion of inspections carried out in bidi making establishments under the Minimum Wages Act, 1948 was not found up to the mark. An enforcement officer conducted only one or two inspections in a month which were restricted only to complaint cases.

7.5   Maintenance of Records and Registers:

7.5.1   The employers are required to maintain records and registers in the prescribed forms under Section 18 of the Minimum Wages Act, 1948. The enquiries from the employers in this regard revealed that they were maintaining the register of employees, wage registers, muster-rolls, log books and register for fines and deductions and wage slips. However, the smaller employers and Contractors were reluctant to show the records maintained by them.Infact, it was found that Contractors were not at all complying with these statutory provisions. For facilitating a proper analysis of the extent of compliance with the provisions of the law, the bidi establishments were classified into two broad categories viz., ‘Principle Employers’ Establishments and ‘Contractors’ Establishments’. The proportion of these two categories of establishments maintaining various types of records/registers prescribed under the Act is presented in Table 7.2.

Table 7.2   Proportion of Establishments Maintaining the Prescribed Records under the Minimum Wages Act, 1948.
 
Nature of the

Establishments

Register of Employees
Wage Register
Register of Deduction
Muster Rolls
Log Book
Register of Fines
Principal Employer

Establishments

86.8
81.6
76.3
86.8
61.8
63.2
Contractor Establishments
0.0
0.0
0.0
0.0
0.0
0.0
Total
45.8
43.1
40.3
45.8
29.2
33.3

7.5.2   The above Table reveals that 86.8 percent of the Principle Employers’ Establishments were maintaining the Registers of Employees and Muster rolls each; 81.6 percent were maintaining Wage Registers and 76.3 percent were maintaining the register of deductions.As many as 63.2 percent were maintaining Registers of Fines while 61.8 percent had issued the log books to the Bidi Rollers. So far as, the record keeping by the Contractors is concerned, it represented a gloomy picture as none of them had kept the records.Most of the Contractors were keeping records pertaining to only the daily issue of raw materials and the bidis rolled in respect of home workers employed by them.The overall proportion of establishments maintaining the prescribed records like the Register of Employees; Wage Register and Muster-rolls varied between 43.1 and 45.8 percent.

7.6.   Level of Compliance with the Prescribed Minimum Wages

7.6.1    The periodic wage revisions and other provisions of the Act are of no consequence unless the notified wages are actually paid to the workers.The proportion of the employees classified as ‘Bidi Workers’ and ‘Bidi Rollers’ receiving the statutory minimum wages was compiled from the data collected on wages and earnings.The minimum rates of wages notified by the unified State Government of Madhya Pradesh continued to be applicable in the present Madhya Pradesh at the time of the study.The extent to which the prescribed minimum wages were being paid to the bidi workers and Bidi Rollers is being discussed in the following paragraphs.

7.6.2   Bidi Workers

7.6.2.1   The proportion of bidi workers receiving the prescribed wages is presented in Table 7.3.

Table 7.3    Proportion of Bidi Workers receiving the Prescribed Minimum Wages (By Categories) 

Sl. No.
Stratum/ District
Sekai Wala
Wrapper/ Labeller/ Maker of Bundles
Taraiwala/ Sorter/ Checker
Raw Material Distributor
Clerk Gr. I/ Gr. II
All Categories
1
Stratum I

Sagar

40.0
55.6
67.7
0.0
83.3
60.0
2
Stratum II

Jabalpur,, Satna

16.7
58.3
67.7
0.0
67.7
50.0
3
Stratum II

Gwalior, Datiya and Vidisha 

67.7
67.7
0.0
0.0
100.0
46.2
4
Stratum IV

Balaghat

50.0
50.0
100.0
-
100.0
77.8
5
Stratum V

Bhopal, Indore, Devas, Ujjain& Hoshangabad

50.0
50.0
50.0
50.0
100.0
53.8
All Strata
40.0
56.3
54.8
28.6
87.5
55.7

The overall extent of compliance with regard to the payment of prescribed minimum wages worked out only to 55.7 percent.It ranged between 46.2 percent in Stratum III to 77.8 percent in Stratum IV. 

7.6.2.2    The level of compliance varied among different categories of workers also. It was found to be the highest among Clerk Grade I/ Grade II being 87.5 percent followed by 56.3 per cent among Wrappers/Labellers.In the case of other categories the proportion of employees receiving prescribed wages varied from 28.6 per cent for Raw Materiel Distributors to 54.8 per cent for Taraiwala/Sorter/Checkers. The smaller employers manufacturing unbranded bidis found it difficult to bear the burden of prescribed wages, as they had to compete with the cheap varieties of small cigarettes.

7.6.3    Bidi Rollers

7.6.3.1   Bidi Rollers continued to be the lowest paid workers though they constituted a bulk of production workers of the industry.Deductions from wages were quite common on various counts like rejection of sub-standard bidis and not for rolling the requisite number of bidis.The studies revealed that though the employers issued free of cost the yarn/thread used in rolling bidi tubes, yet the Sattedars usually made deductions for the cost of the same from the Bidi Rollers.All these factors made it difficult for the enforcement authorities to enforce the Act. The extent of compliance with the prescribed minimum wages in respect of Bidi Rollers, therefore, presented a dismal picture as none of them had received the prescribed wages. 

7.6.3.2   An analysis of the overall compliance with the prescribed minimum wages revealed that Bidi Rollers were exploited at every level at the hands of the employers, the middle men and the Contractors. As per the records, none of the Bidi Rollers were getting prescribed wages.Intensive probing from the Bidi Rollers revealed that they were not paid as per the records and that heavy deductions were made on flimsy grounds e.g. on account of ‘Chhat’ (rejected bidis), lower output on account of sub-standard quality of tendu leaves and inadequate quantity of tobacco issued to them for manufacture of bidis.It was revealed by them that they were unable to roll the requisite number of bidis due to inadequate quantity and poor quality of the raw material supplied to them. The high level of non-compliance with the prescribed wages was also on account of the lack of organisation among the workers, weak bargaining power and lack of employment avenues for most of female home workers engaged in this activity. 

7.7   Difficulties faced by the Enforcement Machinery

7.7.1   The Enforcement Officers faced serious problems especially due to engagement of smaller establishments in production of green beedis in enforcing the Act.The excise exemption available to the manufacturers who manufacture upto 20 lakh bidis in a year had resulted in a flourishing trade in clandestine manufacture of bidis defying the enforcement of labour laws.It was observed that the provision of excise exemption was misused by big manufacturers. They portray themselves as several small non-commercial units to evade excise and other legal obligations.The large number of establishments engaged in the production of unbranded bidis and the Contractors’ establishments managed to operate without the requisite licences, unless they were detected by the enforcement authorities. 

7.7.2   The common violations noticed by the enforcement officers related to non-registration or non renewal of registration, non/inadequate maintenance of registers, non-submission of annual returns and non-display of the abstracts of the Minimum Wages Act, 1948.

7.7.3   The Labour Officers and Inspectors did not have reliable information about the location and dispersal of establishments within their jurisdiction.They usually came to know about the new units during their routine visits to the fieldor through the complaints regarding non-compliance with the legal provisions.The Inspectors faced problems in interviewing the female home workers particularly Muslim women workers. Further, in cases of prosecution, the workers did not come forward to give evidence due to fear of losing their jobs.Even the factory workers had some reservations in disclosing the facts at the time of inspection. Since the Enforcement Officers did not have much information about the location and dispersal of the establishments within their jurisdiction, their visits and inspections were confined only to the bigger and Trade Mark Establishments while smaller establishments did not receive the desired attention.The enforcement staff found it very difficult to make frequent visits to the vulnerable areas due to lack of transport facilities, shortage of time and the paucity of funds etc.In the areas with concentration of bidi establishments, the Inspecting Officers were spending 30- 100 hours per month on travelling in connection with their field duties to enforce a dozen or so labour laws.

7.8   Suggestions for Securing Better Compliance 

7.8.1   In order to achieve the objectives of the Minimum Wages Act, 1948, it is necessary to improve the compliance level. The enforcement officers felt that it should be made obligatory for the employers to furnish a detailed information about their branches, Contractors and Bidi Rollers working for them etc. The Inspecting Officers suggested some measurers for effective enforcement which are as under :-

  1. It should be made obligatory on the part of the employers to furnish the details sought by the enforcement officers.
  2. The fines should be heavy and there should be a provision for imposing on the spot fines as in the case of other laws such as Weights and Measures, Excise, etc.

  3. The power of registration, which at present is vested in the Assistant Labour Commissioner, should be accompanied by an enabling provision of cancellation or withdrawal of the requisite licenses in case of non-compliance with the provisions of the Minimum Wages Act, 1948. 

  4. There needs to be a close co-ordination between the concerned departments like the Department of Labour, Excise, Welfare and Small Industries. The bidi rolling should be carried inside the factory premises.

  5. The system of Sub-Contractors / Sattedars should either the abolished or they should be registered with concerned authorities.The bidi manufacturers should ensure that the wages should be paid to the rollers as per the prescribed rates.

  6. Optimum quantity and quality of tendu leaf and tobacco should be issued to the Bidi Rollers.

  7. The minimum rates of wages fixed/revised need to be publicised through Trade Unions, Radio, Television, etc.

****** End of Chapter 7 ******