Trade unions told the State government on Tuesday that any deferment of variable dearness allowance (VDA) is illegal and will hit more than 60 lakh workers across 82 scheduled employment identified under the Minimum Wages Act. Industry bodies, on the other hand, pitched for four-month deferment of VDA from May this year, citing industrial distress caused by COVID-19 related shutdown.
During a tripartite meeting convened by the Labour Department, the unions stood their ground on VDA arguing that it was part of the notified minimum wages for workers that has been upheld by Supreme Court. Countering this, industry bodies informed the government that industries needed the financial space to recover the lost ground. The meeting had been convened to elicit opinion on deferment of VDA following the request of the Department of Commerce and Industries.
The Labour Department will now send a report to the government stating position of both parties.
While the dearness allowance is fixed once in five years along with revision of minimum wages, variable dearness allowance for the working class is notified by the government annually based on inflationary trends and calculated on the basis of price rise recorded the previous year. Calculated for 2019 and implemented in 2020, the monthly VDA is ₹412 and ₹522 per worker, depending on the industry that he is employed in. All workers in 82 scheduled employment are entitled to receive the VDA.
“At a time when the need is to increase the purchasing capacity to increase consumption, the government wants to snatch away the VDA too,” said AITUC general secretary D.A. Vijaybhaskar. He pointed out that industries in Karnataka are expected to save more than ₹1,000 crore by not paying VDA for four months. “If the same amount is with the worker, it could boost consumption much needed for economic revival,” he said.
“In fact, we have told the government that today’s meeting itself is illegal and contempt of court since Karnataka High Court has upheld the new minimum wages notified, and VDA is a part of minimum wages,” said Mr. Vijaybhaskar.
FKCCI sources said that the VDA deferment had been sought to help the industries to have some financial cushion and allow the industries to settle down after 40 days shutdown. “We have also asked the Labour Department not to take any decision that is harmful to the industry and sought deferment of all labour laws for a period of one year. Industries could close if we are forced to pay,” said the source.
