India is considering shifting from the minimum wage to living wages to pull millions of people out of poverty. While it can have huge financial implications for India Inc and the government as a living wage is indexed to inflation, the move could be a game changer for the country as it strives to meet its Sustainable Development Goal (SDG) commitment of eliminating extreme poverty by 2030.
A living wage is defined as the minimum income necessary for workers to meet their basic needs compared to subsistence wage or a minimum wage which is based on labour productivity and skill sets.
The minimum wage is an amount set by law, whereas the living wage is determined by average costs to live, and the difference between the two could range from 10-25% depending on the cost of living in a place.
A person familiar with the development told ET that senior labour ministry officials have asked to weigh the pros and cons of living wages, including financial as well as economic and social implications on the country. “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 a political backing.” a senior government official said on the condition of anonymity.
Members of the ILO, including India, recently requested the United nations body to contribute to a better understanding of living wages by undertaking peer-reviewed research on concepts and on estimations in that respect and provide assistance to member states in arriving at living wages in their respective countries. India is a founding member of the ILO
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