How Wage Theft Robs The Poor

How Wage Theft Robs The Poor

“Wage Theft is so common” my lawyer friend once told me, “It is so common and yet its implications are not grasped by people at large.” He was advising a small-scale industry employer on labour matters when he discovered to his dismay that the employer was not paying minimum wages. (My lawyer friend refused to continue consulting unless the entrepreneur paid Minimum Wages. And lost his client!)

And that brings us to the unique similarity when rich and poor are victims of theft. The rich own so much that they often do not discover a theft. The poor do not know what was theirs, so they too do not discover a theft. Wage theft, for the poor, exemplifies it.

To understand what is wage theft I will quote Wikipedia verbatim : ‘Wage theft is the denial of wages or employee benefits rightfully owed to an employee. It can be conducted by employers in various ways, among them failing to pay overtime; violating minimum-wage laws; the misclassification of employees as independent contractors, illegal deductions in pay; forcing employees to work “off the clock”, not paying annual leave or holiday entitlements, or simply not paying an employee at all.’

The workers do not insist on being paid minimum wages. Rather, they cannot! In most cases they do not know the declared rate of Minimum Wage. In other cases, they do not have bargaining power to force an employer to pay it. For every employed workman, there are ten others unemployed persons willing to work on a rate less than the Minimum Wage! That’s the harsh reality. And Unions have lost their teeth, the genuine or committed union leaders watch workers’ exploitation from sidelines.

The situation became worse during the Covid pandemic. Mostly those are cases of migrant workers mainly from Arab Gulf countries. People were willing to take up any job as long as it fetched them some income. Scores of articles have been written on how employers committed wage theft on migrant workers.

Here is a live case of how committed wage theft. Take the case of SVS Aqua Technologies. It existed since 2012 and never paid Minimum Wages to workers. The recently submitted report by a Fact-Finding Team calculated the wage theft. It is an eye opener because it monetizes the wage theft, a unique exercise, as you will readily agree.

Here is how wage theft is calculated: Step one is to calculate the difference between Minimum Wage and Actual wages. Remember that the minimum wage includes ‘special allowance’ and by law you have to pay (in Maharashtra) 5% on the aggregate as HRA. Step two is to multiply it by the number of months a worker has worked. That gives us the amount of actual wages stolen. Step three is to add leave wages not paid. Every worker is entitled to certain days of leave in a year. But (s)he is often denied it. Step four is to add the social security benefits denied. This means PF, ESIS contributions not paid as well as Gratuity deprived. This typically works out to 32% of the denied wages. Step five is to add up the amounts to get the wage theft.

When you calculate it at the factory level is works out to be a big figure. It worked out to be Rs 7.59 Lakhs per worker in SVS Aqua Technologies case.

Courtesy PictureQuotes

And mind you, we have not calculated the interest on the wages not paid. Since many employers do it over a long period, even the loss of interest becomes sizeable.

There are more implications which we must take a note of. If PF Contribution is not paid by the employer, his retirement benefit is directly affected. What this means is that once the person is out of job, he will soon hit the streets as a beggar unless he has some land to till. In the case of SVS Aqua Technologies 17 workers died in the fire at the factory. Their family would have been entitled to receive the money under the ‘Employees Deposit Linked Insurance Scheme’ which is a sizeable amount. And they also lost a sizeable amount in PF accumulation.

If the employers did not cover the workers, as in the case of the company above, what is the amount their family will get paid? You know the answer!

Now the employer company, SVS Aqua Technologies has graciously (?) declared an ex-gratia payment of Rs 10 Lakh. You will readily see that it is funded mostly by the stolen wages, as they amount to Rs. 7.59 L without interest.

One of the questions which our society has shied away from thinking is ‘what should be the minimum lifestyle our lowest category of workers enjoy.’ The minimum wage is actually a bare minimum subsistence wage. It does not allow a person to live with dignity. It is of course open for an organization to pay according to what it thinks is the just and fair pay, obviously higher than the statutory minimum wage.

The real question is ‘who will bell the cat’ in the absence of trade unions. Though everyone knows the answer, it will not be uttered. Sometimes the answer is available on their website in the form of vision, mission and values statements. Do you get me?

Vivek S Patwardhan

“What you leave behind is not what is engraved in stone monuments, but what is woven into the lives of others.” **** “Aroehan: Creating Dream Villages in Mokhada by 2025: “No Malnutrition Deaths, No Child ‘Out of School’, Reduction in migration by 50%.”