Capitalist system ensures maximum exploitation of the working class

Recently the Delhi Government announced an increase in the minimum wages effective 1st February 2010. As per the revised wages, the minimum monthly wage for an unskilled worker will be Rs. 5,278. This increase is the result of the persistent struggle of workers, trade unions and other organizations like the Mazdoor Ekta Committee.

Recently the Delhi Government announced an increase in the minimum wages effective 1st February 2010. As per the revised wages, the minimum monthly wage for an unskilled worker will be Rs. 5,278. This increase is the result of the persistent struggle of workers, trade unions and other organizations like the Mazdoor Ekta Committee.

The demand of workers' organisations for a family of three has been for a minimum wage for Rs. 11,054 per month in line with the recommendation of the 15th Standing Labour Conference. Workers' organizations have opposed the 33% increase as too little. They are demanding that the Government should constitute an Advisory Board that will have members from workers' organisations. This Board should decide the basis on which the minimum wages are to be determined and how often they are to be revised to conform to the cost of living index. So far the Delhi Government has been ignoring this demand.

Meanwhile, several associations of the capitalists and traders have openly declared that they will not honor the increase in the minimum wages. It looks likely that there will be sharp struggle between the workers and the capitalists on this issue in coming months.

Importance of the struggle for a hike in minimum wages

A worker and his family survive on the wages he receives in exchange for his labour power. A worker does not have private property to derive income from and therefore, the wages determine the standard of living of the family, i.e., the level of fulfillment of their basic needs like food, shelter, education, healthcare, culture, etc. It is the wages that determine whether they will be undernourished or live a healthy life, whether they will live in dirty slums or in tiny one-room flats. Capitalists strive to lower the minimum wages as much as possible in order to increase the surplus value they extract from the unpaid labour of workers, by decreasing the wages of all workers. On the other hand, workers struggle to raise the minimum wages so that they can make two ends meet. The experience of past 63 years clearly shows that capitalists have grown richer by exploiting the labour of the workers, while the living conditions of the workers have deteriorated.

Table: Food related expenses

Food Item

Quantity (in grams)


Market price (per kg)

(in Rs.)
















Potato / Vegetables





Ghee / Oil

























Total calories




Daily expenditure on food for one worker


Daily expenditure on food for a family of three


Minimum Wage calculation

Monthly expenditure on food by a worker family


Expenditure on clothes


20% of total expenditure on fuel, electricity, etc.


House rent


25% of expenditure on education, health and other needs according to the order of the Supreme Court


Total minimum wage


Conditions of workers in Delhi and their demands

The conditions of the workers in Delhi are no different than those of workers in other industrial cities although Delhi is the capital city of the country. There are dozens of industrial areas like Okhla, Wazirpur, Lawrence Road, Nangloi, Jhilmil and Patparganj, where labour laws are openly violated. The laws regarding the minimum wages, ESI, provident fund and 8-hour workday are routinely flouted. The extent of these violations can be gauged from the fact that the owners of the factories have publicly declared that they will not honour the increase in the minimum wages which was to be implemented from 1st Feb 2010.

The recent increase in minimum wages was calculated by adding the increase in cost of living to the previous minimum wage. The minimum wage was last reviewed in 1994. At that time the minimum wage was fixed at Rs. 1382 per month. 16 years have passed since then and the government has not yet appointed an Advisory Board for review. The review and revision of minimum wages should be carried out every five years. This shows the level of concern of that the government of the capitalists and its Labour Ministry has towards workers.

What does this mean? Comparing with the situation in 1999, for which data is available (see graph below), if the wages were regularly revised in accordance with the increase in prices of the items consumed by the workers, it would mean that workers could afford as much food for their families as they did 11 years ago. But this has not happened because the government always finds ways to underestimate the cost of living. The truth is that the minimum wages today have actually lowered the purchasing power of the workers as compared to the minimum wages 11 years ago.

Even if the minimum wages was correctly adjusted according to the cost of living, the workers will still be shortchanged. This is because, adjustments are done only once or twice in a year. As the prices keep on increasing, the workers' families have to manage with less purchasing power until the adjustment takes place next after several months.

For example, six months prior to February 2010, the prices of food items were sky rocketing. The government is forced to acknowledge this much but has not provided any relief to the workers for these six months of very high prices. This is the main reason why workers' organizations have been demanding adjustment in the minimum wages on a monthly basis.

Surplus Value

Everyday the worker labours, one part of his work creates value equal to his wages. His labour in the remaining part of the day produces surplus value that is pocketed by the owner of the factory.

Millions of workers have worked from their youth at minimum wages and have to work overtime to make ends meet. They are considered unskilled for the whole of their lives even when they have 30 years of experience. Many workers die early in life or otherwise become unfit for work due to bad working conditions. This is the situation existing in our country.

If we look at the government data of minimum wages from February 1999 to January 2010 (see the graph above), we can see that there is no real increase in the minimum wages. Given the fact that the productivity of labour has been increasing, the question naturally arises as to where the fruits of labour are going?

According to the government, the GDP increased at the rate of 7% from 1992-93 to 2008-09 and has tripled in this period even after adjustment with the rate of inflation. At the very least the workers have contributed to doubling of the GDP in this period and the remaining contribution can be attributed to wealth created by the farmers and petty bourgeoisie in cities and towns. Keeping in mind the fact that capitalists were extracting surplus value from the workers even in 1992-93, the question is what happened to all the additional wealth that has been created by the workers?

Clearly, capitalists have increased their profits and the additional surplus value has been distributed between the capitalists, owners of urban real estate and the finance capitalists. Government data shows that 40% of the wealth created by the toil of workers and peasants every year is appropriated by the capitalist class who have not worked for creating it.

Anomalies in the dearness allowance

It should be made clear here that the Variable Dearness Allowance (VDA) is full of anomalies. Firstly, dearness is calculated on the basis of the Wholesale Price Index (WPI). There is a great deal of difference in increases in wholesale and retail prices. That implies that workers are compensated to a much smaller extent than the rise in prices. The second big anomaly is that the WPI used is upto one year old.

The Table below shows how the rising prices adversely affect the lives of workers and their families. If there are more than three members in workers' family or if someone in the family is unwell or incapacited or handicapped then workers face great economic and mental tension. On the basis of this calculation (and the recommendations of the 15th Labour Conference), workers' organizations had demanded a revision of the minimum wages.

Minimum wage should be declared at an all-India level

Today labour is a state subject in India. This is beneficial to the capitalist class. On the basis taking adwantage of this, the capitalist class depresses the wages of the workers everywhere. For instance, when the worker's organisations demanded from the Chief Minister of Delhi for an increase in the minimum wage, she replied that if the minimum wages were increased in Delhi then businesses in Delhi would to shift to Haryana or Uttar Pradesh.

Hence, the working class should demand that minimum wages are fixed for the whole country. Also, it should be revised every month according to the rise in cost of living. Simultaneously, workers have to struggle to ensure that working class has a say in the fixing of the minimum wages.

The loot of workers' labour and wages

A capitalist only pays as much wage to a worker that is necessary for the worker to return to work the next and reproduce the next generation of workers. A capitalist pays only a fraction of the value created by a worker as his wage and keeps the rest as profit. In addition to this appropriation, workers end up paying interest and rent from their wages. Every month roughly one fourth of his wages go to pay the rent on his dwelling. Invariably, due to very low wages, workers have to take loans from bank or money-lender to make his ends meet. Part of their wages go as payment of principal and interest on these loans. Additionally, workers have to pay school/college fees for the education of his children, healthcare expenses, etc., from their wages.

While expenses towards loan payments to creditors, education and healthcare go directly from workers' wages, additional amounts are extracted by the government directly or indirectly. For example, hundreds of items of consumption like clothes, salt, provisions, electric appliances, soaps, oil, etc. are indirectly taxed by the government. Workers also have to pay service taxes on electricity, water, house, road, entertainment in addition to paying for these amenities. Workers are also burdened by the VAT.

In addition, if the income of workers is above the limit set by the government, then they have to pay direct income tax and various surcharges like education cess, etc.

The government justifies collecting a part of the wages of the workers as tax by claiming that it is being used for the welfare of society as a whole. However, the money collected in the name of providing education, transport, roads, drinking water, sanitation, lighting and services to aged and handicapped in the form of direct and indirect taxes is not deployed to provide these services. In big cities and towns where workers live in slums, even the basic services are not provided. Health services to the workers are very inadequate, hospitals are far away and often the sick die before reaching the hospital. Even after 60 years of the Republic, majority of the people are deprived of clean drinking water.

On the other hand, a large fraction of the taxes collected from the toiling people either directly goes to the capitalists or is used for unproductive purchases like purchase of armaments. A large part also goes to run the state machinery, which suppresses the workers and defends the rule of the capitalists.

It is necessary for workers to struggle to establish the rule of workers and toilers. Every person as member of the working class will have to advance the interest of the class, help to organise the class, raise its political consciousness and clash with the capitalists in the interest of the whole class.

When the working class comes to power, all the surplus value created by its toil will be used for the all-round development of society. This rule will ensure that adequate resources are allocated for the development of infrastructure, industry, agriculture, transport, education, housing and well being of the elderly and children of all toilers


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