India is working towards replacing the minimum wage with a living wage by 2025, seeking assistance from the International Labour Organization (ILO) to establish a framework. Currently, over 500 million workers in India, 90% of whom are in the unorganized sector, earn a daily minimum wage of ₹176 or more, varying by state. However, the stagnant national wage floor since 2017 lacks enforceability, resulting in wage payment discrepancies across states. Despite being a founding member of the ILO since 1922, India is yet to implement the Code on Wages passed in 2019, which proposes a universal wage floor applicable nationwide once enacted. This move aligns with India’s commitment to achieving the Sustainable Development Goals (SDGs) by 2030. The shift from minimum wages to living wages is seen as a strategy to accelerate poverty reduction efforts while ensuring the well-being of millions. Officials have enlisted ILO’s support for capacity building, data collection, and demonstrating the positive economic impacts of living wages. A living wage, as defined by the ILO, ensures a decent standard of living for workers and their families, covering essentials like food, clothing, shelter, education, and health protection. In contrast, a minimum wage serves to prevent unduly low pay for daily wage workers and is calculated based on overall economic factors, while the living wage considers location, marital status, and dependents.
What is a living wage?
The International Labour Organization denotes the concept of a living wage as one that is “necessary to afford a decent standard of living for workers and their families, taking into account the country’s circumstances and calculated for the work performed during the normal hours of work.”
Minimum wage
A minimum wage is defined as the minimum amount of remuneration, that the employer is required to pay to the employees for the amount of work performed during a given period, which cannot be reduced by collective agreement or an individual contract, reports said.
The purpose behind this concept is to project the daily wage workers against unduly low pay.