Living Wage System in India | UPSC

Living Wage System in India: India aims to replace its minimum wage system with a living wage by 2025, seeking technical assistance from the International Labour Organization (ILO) for framework development.

Issues with the present system

• In India, the government annually updates the minimum wage, as mandated by the Minimum Wages Act of 1948.
• This law requires employers to pay workers at least the minimum wage set by the statute and ensures workplaces maintain adequate safety measures.
  • However, it offers guidelines without specifying the minimum wage itself.
• Many workers earn a daily minimum wage of ₹176 or more, but the national wage floor, unchanged since 2017, lacks enforceability across states, leading to wage payment discrepancies.
  • This lack of upward movement in wages has led to disparities in wage payments across different states.
• Setting minimum wages for certain jobs falls under both the Minimum Wages Act, 1948, and the Contract Labour (Regulation and Abolition) Act, 1970, which can lead to potential confusion.
• Gender disparity exists in scheduled employment, where jobs with predominantly female workers often have lower minimum wages compared to those with predominantly male workers.

Living Wage vs. Minimum Wage:

• The living wage is defined by the ILO as “the wage level 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 normal hours.”
• It is calculated based on the principles of estimating the living wage.
• In contrast, the minimum wage is the lowest amount of remuneration required by law to be paid by employers to employees for work performed during a given period.
• While the minimum wage aims to protect workers from low pay, the living wage goes further by providing enough income to cover basic needs such as food, clothing, shelter, and more.

Challenges and Benefits of Shifting to Living Wages:

Challenges:

• Implementing a national living wage framework across states with differing costs of living demands meticulous planning.
• Certain businesses, particularly small and medium enterprises, may experience financial strain due to heightened labor costs.
• Another significant challenge in implementing a living wage system is the diversity of living costs across different regions of India.
• The cost of living varies significantly between cities, states, and even districts, making it difficult to establish a uniform living wage rate.

Benefits:

• The transition from minimum wages to living wages is regarded as a strategic initiative to expedite poverty alleviation efforts, prioritize overall well-being and advance the achievement of the Sustainable Development Goals (SDGs) by 2030.
• Addresses concerns about the current minimum wage’s inadequacy, particularly in coping with inflation, and fosters a more equitable and sustainable economy.

Other key facts:

• India, a founding member of the International Labour Organization (ILO) and a permanent member of its governing body since 1922, enacted the Code on Wages in 2019.
  • This legislation proposes a universal wage floor to be applied across all states once implemented.

Ref:Source