Wage Disparities in India: A Study of the Payment of Wages Act, 1936

Abstract

Wage inequality in India is a significant economic and social issue influenced by factors such as gender, geography, industry, and type of employment. Despite existing legislation like the Minimum Wages Act of 1948, the Equal Remuneration Act of 1976, and the Payment of Wages Act of 1936, disparities persist. Rural-urban wage differentials drive massive migration, putting immense pressure on city infrastructure while creating labour shortages in rural areas. Urban labourers typically earn higher wages due to better access to industries, education, and skill training. In contrast, rural workers often depend on agriculture and the informal sector, where wages are much lower. Gender wage disparities further exacerbate economic inequalities, with women earning 20-30% less than men. This gap arises from factors such as employment segregation, career breaks, and societal biases, which limit women's economic participation and financial autonomy. Additionally, the differences between organized and unorganized sectors highlight these wage gaps; the organized sector generally offers job security and benefits, while the unorganized sector suffers from employment insecurity and lower pay. Although the Payment of Wages Act aims to prevent wage exploitation and ensure timely payment, its implementation remains weak, particularly in the unorganized sector, where many workers are underpaid or face wage theft. The Minimum Wages Act sets wage floors to prevent exploitation, and the Equal Remuneration
Act seeks to eliminate gender-based wage discrimination. However, their effectiveness is diminished without stronger enforcement measures. India's gender pay gap is significantly higher than the global average, leading to broader economic disadvantages such as lower growth and increased social inequality. Studies show that closing gender pay gaps could add trillions to the global GDP, with India being a major beneficiary. Addressing pay gaps requires a multi-faceted approach that includes rural
industrialization, more effective enforcement of labour laws, online wage tracking, improved skills development initiatives, and gender-neutral workplace policies. Implementing these changes would not only promote fair wages and economic stability but also create a more equitable society where all workers, regardless of gender or geographic location, receive fair compensation for their efforts.