To Live Beyond: India To Transition From Minimum Wage To Living Wage By 2025

Recently, in a step towards the betterment of labour rights, the International Labour Organisation moved towards an agreement for taking the necessary step towards a 'Living Wage'. The Global body's document laid emphasis on the importance of the concept, bringing greater clarity.

An Indian official according to an Economic Times report, said that India would move from being a Minimum Wage system to a Living Wage system by 2025.

Minimum Wage

Now minimum wage in simpler terms is the stipulated lower base of compensation, that an employer is supposed to pay the employee. Here the primary unit is the amount accrued in an hour. An employer cannot make a payment below that mark. In India, the average wage varies from state to state and city to city. From Rs 22 an hour to Rs 50 an hour. The richest state in the country, Maharashtra has a basic minimum wage of Rs 62.87 (unskilled worker). Compare that to Bihar, a state that scores underwhelmigly in most indicators, the minimum wage stand at Rs 49.37 an hour.

Apart from these variations, one of the major conundrum that faces the paradigm of employment in the most populated country in the world, is the type of employment. Of the nearly 500 million strong workforce, most of them are employed with the unorganised sector, this segment falls outside the purview of scrutiny. As a result of which, in many cases even the conditions of a minimum wage are not met. For context, the United States' federal minimum wage currently stands at USD 7.25 or Rs 605.26 an hour.

Fair Wage

Then comes the concept of a 'Fair Wage' that comes after minimum wage, here a fair wage lies between the minimum wage and the living wage. It surpasses the minimum threshold yet falls below what's required for a living standard. While the minimum wage sets the baseline, the upper boundary of a fair wage is determined by the industry's financial capability to compensate.

Living Wage

Finally we come to the concept at the centre of the discourse, 'Living Wage'. Here the idea is to look beyond the primary necessities or what is described by many as 'fundamental' in the existence of an individual. This, as the concept and Minimum wage and its scope leaves a large part exposed to potential disruption, which is equivalent to keeping ones head out to continue breathing, while the rest of the body is submerged in water. This, understandably is not a sustainable solution.

Living Wage, therefore, takes into consideration, the elements, that are beyond the primary scope and includes the facets of greater surety and security for the worker and their family. In simpler words, this concept accommodates the minimum income essential for a worker to cover basic necessities, including crucial social expenditures like housing, food, healthcare, education, and clothing.