Wages Code 2019 : Impact on Debt Bondage – UPSC GS3

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New changes brought in The Code on Wages, 2019:
Minimum Wages (Central) Rules, 1950
The Code on Wages, 2019
Advancement: It provided that; advances made  by employer to employee should not exceed an  amount equal to wages for two calendar  months of the employed person.
Changes made in Advancement criteria:
  • It allows deductions from wages for the recovery of advances of whatever nature, including advances for travelling allowance or conveyance allowance.
  • No Cap on the advance amount provided. 
  • It allows the employer to charge interest rate on the advances made to the employee.
Deduction: It provided that the monthly  instalment deduction should not exceed 1/4th of  the wages earned in that month.
Changes in Deduction criteria: The Code  increases the permissible monthly deduction towards such recovery, up  to one-half of the worker’s  monthly wage.
How the new changes in the Code on Wages institutionalises Debt bondage?
  • By removing the cap on the advances made, it allows employers to lend unlimited advances to their workers. This gives the employer more control over the employees.
  • By adding the clause on interest. Moreover, with no details on what might be charged and increasing the deduction amount from 2 to 4 months will trap the employee in a vicious cycle of mounting debt and dwindling income.
The net impact is an open sanction for the bonded labour system to flourish.
Why debt bondage still exists?
Despite our Constitution, the Labour Codes or various Supreme Court judgments, which have deterred the bonded labour system, it still exists because of the following reasons:
  • Existence of bonded labour has simply been denied among elected representatives, or grossly understated.
  • Dominant castes don’t want to give away their power. According to Anand Teltumbde, the dominant castes understand that if Dalits came to own the means of survival, they will abandon their low status and the social bondage.
  • Deepening economic inequality to the advantage of the privileged castes and classes.
What are the negative implications?
  • It denies the employee, their families and future generations, of their most basic rights.
  • Disproportionate effect of this huge regression in the Labour Code will fall on Dalits and the landless. Because, the vast proportion of landless agricultural labourers in India, to date, are Dalits.
  • According to Ambedkar, economic enslavement was an extreme form of coercion, and it makes political freedom meaningless.
Way forward:
BR Ambedkar had suggested for state intervention in the economic structure to prevent such practices. He proposed a complete recast of rural and agrarian land structures, and state ownership of land.
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