India’s Transition from Minimum Wage to Living Wage

India aims to replace its minimum wage system with a living wage framework by 2025, seeking assistance from the International Labour Organization (ILO) for technical support in creating and implementing this transition.

Understanding the Living Wage

• Definition: The living wage is the income necessary for workers and their families to afford a decent standard of living, considering the country’s circumstances and calculated for normal working hours.
• Calculation: Determined based on essentials like food, clothing, shelter, as well as additional provisions for frugal comfort including education and health protection for the worker and their family.

Differentiation from Minimum Wage

• Definition: Minimum wage is the minimum remuneration required by law for work performed within a given period, ensuring workers are protected against unduly low pay.
• Criteria: Living wage calculations consider location, marital status, and number of dependents, whereas minimum wage is determined based on overall economic conditions.

India’s Strategy and Commitment

• Objective: India’s shift towards living wages aims to accelerate poverty reduction efforts and enhance the well-being of millions of workers.
• Support from ILO: Assistance sought from the ILO includes capacity building, systematic data collection, and evidence-based analysis to highlight positive economic outcomes resulting from living wage implementation.

Current Status and Challenges

• Legislative Framework: Despite the passage of the Code on Wages in 2019, implementation remains pending, with proposed universal wage floors applicable across all states.
• Economic Impact: Stagnant national wage floors since 2017 have led to disparities in wage payments, particularly affecting the vast unorganized sector where 90% of India’s workforce is employed.