Labour ministry looking to replace ‘minimum wage’ by ‘living wage’: Report
Contents News/Article Date: 29th December 2022
Relating to which Act: The Minimum Wages Act, 1948,
Applicable to which State: Applicable to all States and Union Territories
Type: “Initial discussions have begun within the Labour Ministry. India could seek help from the International Labour Organisation (ILO) to arrive at living wages if the idea gets political backing,” a senior government official said.
Pertains to: Employees below the poverty line in India
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Karma Global has a system to regularly track announcements of minimum wages declared and also the consumer price index and in this respect, as per the report, in a bid to pull people out of poverty, the Labour Ministry is considering a shift from the minimum wage to a living wage. The move may play a significant role in helping India meet its Sustainable Development Goal to eliminate extreme poverty by 2030.
“Initial discussions have begun within the Labour Ministry. India could seek help from the International Labour Organisation (ILO) to arrive at living wages if the idea gets political backing,” a senior government official said.
The ministry has asked officials to weigh the pros and cons of such a step. They have also been asked to look at its economic, social, and financial implications.
Subject: Labour ministry looking to replace ‘minimum wage’ with ‘living wage’: Report
For greater details, appended below is the complete news item
Published: December 29, 2022
Proposal to Shift from “Minimum” to “Living Wages “WhatsApp sharing button
Significant role in helping India meet its Sustainable Development Goal Twitter sharing button
Eliminate Extreme Poverty by 2030 Facebook sharing button
India could seek help from the International Labour Organization telegram sharing button
To weigh the pros and cons of such a step messenger sharing button
The Union Labour Ministry is currently mulling to shift from “minimum wages” to “living wages” in a bid to bring more people from poverty in the country.
What is a living wage?
The term “living wage” is the theoretical income level that enables an individual or a family to afford adequate shelter, food, healthcare, and other basic necessities. It is the minimum income that helps support a satisfactory standard of living and prevents individuals from falling into poverty.
How is the living wage different from the minimum wage?
- A living wage is defined as the minimum income necessary for workers to meet their basic necessities. It is different from the minimum wage, which is based on labour productivity and skill sets.
- The minimum wage is the lowest amount of money a labourer can earn as mandated by the law. It does not change based on inflation. It can increase only with government intervention. This is not true for the living wage.
- The living wage is determined by the average cost to live comfortably, while the minimum wage is the fixed amount set by the government.
- The difference between the minimum wage and the living wage can range between 10 and 25 percent based on the cost of living in a specific place.
About India’s decision
The Indian government is considering shifting from the minimum wage to the living wage to eliminate poverty in the country. If such a shift happens, it would have significant financial implications for India and the government. It will make Sustainable Development Goal commitments easily achievable.
India is planning to receive assistance from the International Labour Organization (ILO) to understand what constitutes a living wage since it is highly subjective. The ILO member states, including India, have recently requested the ILO to contribute to the improved understanding of living wages by undertaking peer-reviewed research on the theoretical concepts and theoretical estimations.
In India, the minimum wage has been fixed at Rs 178 per day.