India is making preparations to replace the minimum wage with a living wage by 2025. In order to create a framework for estimating and implementing these living wages, the country has sought technical assistance from the International Labour Organization (ILO).
Living wages refer to a minimum income that is necessary for a worker to meet their basic needs. This includes essential expenses such as housing, food, healthcare, education, and clothing. The ILO recently endorsed the concept of living wages, which would be higher than the basic minimum wages currently in place. A senior government official stated that India could surpass minimum wages within a year.
The ILO approved this reform during its 350th governing body meeting in Geneva, which concluded on March 14. In India, there are over 500 million workers, with 90% of them employed in the unorganized sector. Many of these workers receive a daily minimum wage of 176 Indian Rupees or more, depending on the state in which they work. However, the national wage floor, which has not been revised since 2017, is not binding on states, and some states pay even less.
The Code on Wages, passed in 2019 but yet to be implemented, proposes a wage floor that will be applicable to all states once the Code is put into effect.
India has been a founding member of the ILO and has been a permanent member of its governing body since 1922.
New Delhi has set its sights on achieving the sustainable development goals (SDGs) by 2030. Replacing minimum wages with living wages is seen as a way to expedite India’s efforts to lift millions of people out of poverty while ensuring their well-being, according to officials.
“We have requested assistance from the ILO in terms of capacity building, systematic data collection, and evidence of the positive economic outcomes that result from the implementation of living wages,” said the aforementioned official. Sumita Dawra, the labor secretary, proposed during the ILO meeting that the UN body should consider health, education, and standard of living as key indicators in defining living wages for developing countries. These measures are used to assess national multidimensional poverty in India.
“The National Multidimensional Poverty Index in India evaluates simultaneous deprivations in health, education, and standard of living, which are represented by 12 indicators aligned with the sustainable development goals,” Dawra stated. “The definition of living wages must incorporate these dimensions,” she added, emphasizing that the standard of living component should include economic, social, and demographic factors.
