Living Wage vs. Minimum Wage: India’s Shift in Labor Policy
GS-3 Mains
Short Notes or Revision Notes
Question : Examine the rationale behind India’s proposed shift from a minimum wage system to a living wage by 2025, in collaboration with the International Labour Organisation (ILO).
Context
- India plans to shift from a minimum wage system to a living wage by 2025 with help from the International Labour Organisation (ILO).
Living Wage vs. Minimum Wage
- Living Wage:The income needed to afford a decent standard of living for a worker and their family.
- Defined by ILO as “the wage level necessary to afford a decent standard of living for workers and their families.”
- Typically higher than the minimum wage.
- Minimum Wage:The lowest legal wage an employer can pay their workers.
Global Trends in Minimum Wage
- Several countries have increased minimum wages to combat inflation:
- UK: 9.8% increase in national living wage.
- Canada: 3.9% increase in federal minimum wage.
- Belgium: Minimum wage exceeds ₹2,000 per month.
Living Wage in India
- Current minimum wage is ₹176/day or more, but:
- Lacks enforceability across states.
- Hasn’t increased since 2017, leading to wage disparities.
- Living wage varies by region: As of 2018, ₹10,300/month was reported for an individual.
Impacts of Living Wage
- Contractual Staff:Many non-permanent workers currently receive minimum wage.
- Transition could significantly impact their income.
- Consumption:Increased wages could lead to higher consumption and economic growth.
- Inflation:Wage-push inflation could occur, raising overall prices.
- Income Inequality:Living wages could help narrow the gap between rich and poor.
- Businesses:Some businesses, especially SMEs, may struggle with increased labor costs.
- Potential impact on profitability and sustainability.
International Labour Organisation (ILO)
- Founded in 1919, a specialized UN agency promoting workplace rights and decent work.
- India is a founding member.
- Aims to:
- Promote rights at work.
- Encourage decent employment opportunities.
- Enhance social protection.
- Strengthen dialogue on work-related issues.
Conclusion
- Shifting to a living wage aims to improve lives of Indian workers, especially contractual staff.
- It targets poverty reduction and improved well-being.
- India’s collaboration with ILO for a well-defined system is crucial for successful implementation.
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