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Business News/ Economy / India to shift from minimum wage to living wage system by 2025: Know what it means for the country
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India to shift from minimum wage to living wage system by 2025: Know what it means for the country

The Indian government hopes to demonstrate the beneficial economic impacts of adopting living wages. To achieve this, they are collaborating with the International Labour Organisation to develop capabilities and establish systematic data collection mechanisms related to living wage implementation

The shift from minimum wages to living wages is aimed at accelerating efforts to lift millions out of poverty and ensure their well-beingPremium
The shift from minimum wages to living wages is aimed at accelerating efforts to lift millions out of poverty and ensure their well-being

India is set to replace its minimum wage system with a living wage system by 2025. The government is seeking technical assistance from the International Labour Organisation (ILO) to develop a framework for estimating and implementing the living wage, as per the Economic Times report.

This move follows the ILO's endorsement of the concept of a living wage earlier this month. The endorsement came after an agreement was reached during a Meeting of Experts on wage policies in February. It was subsequently endorsed by the ILO's governing body on March 13, per the Economic Times report.

The shift from minimum wages to living wages is aimed at accelerating efforts to lift millions out of poverty and ensure their well-being, the report stated. The report added that India has more than 500 million workers, with 90% in the unorganised sector.

Despite many earning a daily minimum wage of 176 or more, the national wage floor has remained stagnant since 2017. According to the report, the lack of enforceability across states has led to wage payment discrepancies.

India, a founding member of the ILO and a permanent member of its governing body since 1922, passed the Code on Wages in 2019. According to the report, this code proposes a universal wage floor that will apply to all states once implemented.

The report added that India aims to showcase the positive economic outcomes of implementing living wages by seeking help from the ILO for capacity building and systemic data collection.

The living wage is the wage level required to afford a decent standard of living for workers and their families, considering the country's circumstances, and calculated for the work performed during normal hours.

India is committed to achieving the Sustainable Development Goals (SDGs) by 2030, including the goal of promoting decent work and economic growth.

India's strong economic growth, with a rate of 8.4 per cent, indicates the country's capacity to support higher wages.

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Published: 27 Mar 2024, 09:20 AM IST
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