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India planning to opt Living Wage instead of Minimum Wage

Why is it in the news? 

  • India intends to transition from minimum wage to living wages with International Labour Org
  • anisation (ILO) assistance by next year.
·       A living wage, as defined by the ILO, is the remuneration needed to maintain a decent standard of living for workers and their families, factoring in the country’s conditions and typical work hours.

·       Unlike the minimum wage, which is the legal minimum employers must pay for work, the living wage generally exceeds this amount to ensure adequate livelihoods.


Global Trends

  • Multiple nations, including the UK, Canada, and Belgium, have raised their minimum wages to shield their workforce from inflation.
  • The UK saw a significant increase of 9.8% in its national living wage, while Canada’s federal minimum wages rose by 3.9%.
  • Additionally, Belgium elevated its minimum wage, surpassing Rs 2,000 per month.

Indian Scenario

  • In India, despite many earning a daily minimum wage of 176 or more, the stagnant national wage floor since 2017 lacks enforceability across states, resulting in wage payment disparities.
  • The living wage varies across regions based on the cost of living, with reports indicating it to be around ₹10,300 per month for an individual as of 2018, highlighting the need for a more equitable compensation system nationwide.

Impact of living wage on Indian Economy

  • Implementing a living wage in India could boost consumption and stimulate economic growth by raising wages to support a decent standard of living.
  • However, it may also lead to wage-push inflation and strain small and medium enterprises financially, impacting profitability.
  • While addressing income inequality, it requires careful planning to mitigate potential economic slowdown and ensure a fairer pay system for all workers, including young people entering the labor market.


  • Transitioning to a living wage in India signifies a crucial advancement in enhancing the livelihoods of workers, especially those on contractual terms, with the potential to alleviate poverty and improve overall well-being.
  • India’s dedication to establishing a robust system, supported by the ILO’s technical assistance, is essential for effectively implementing this policy and achieving its intended benefits.

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