Everything you need to know about India's plan to shift from minimum wage to living wage by 2025

India is planning to change its minimum wage norm and switch to a living wage arrangement by 2025. According to reports, the government of India and the International Labour Organisation (ILO) are collaborating on this initiative to construct a comprehensive plan for implementing the living wage in India. 

The initiative aims to reduce poverty in India, empowering millions and improving their quality of life and socioeconomic status. Minimum wages in India vary across different locations and sectors. Currently fixed at Rs. 176 or more, the minimum wage has not increased since 2017, even though living costs and inflation have surged. 

The concept of living wages provides fair wages to labourers to ensure the financial stability of citizens during inflation and rises in living costs. It is important to understand the difference between minimum and living wage and how it affects the citizens of India in the upcoming years. 

What is a living wage?

According to ILO, a living wage is a wage paid to an individual, considering the current living costs in the country, thereby ensuring improved living standards. The official definition from ILO states, "the wage level necessary to afford a decent standard of living for workers and their families, taking into account country circumstances and calculated for work performed during normal hours.”

Implementation of living wages and its effects

With a population of 140.76 crores, the implementation of living wages can be a daunting task in India, as wages vary from state to state. It requires prudent planning, and many small businesses in numerous sectors might experience financial losses as a result of the surge in labour costs.  

Following are some potential effects of India's shift from minimum wage to living wage on its citizens:

• Fair wages can lead to decent living standards and enable proper education and nutrition for Indian families. 
• Decline in financial stress resulting in an enhancement of mental and physical well-being. 
• Increased employee loyalty towards the employer ensuring better performance. 
• On the negative side, the rise in labour costs might jack up production costs, leading to inflation.
• Small businesses may struggle financially with higher labour costs. 

 

Also Read: Unemployment surges to 83% among youth of India: ILO-IHD Report 2024

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