Indian government plans to shift from minimum wages to living wages

Urging the International Labour Organisation (ILO) to include elements which can assess 'multidimensional poverty' under 'living wages', the Indian government's suggestion is significant as the government is planning to move to living wages instead of minimum wages.

According to a report by Financial Express, official sources said, "A framework for living wages has to be prepared first, which the ILO has to do. We have suggested ILO to study the concept of multidimensional poverty in India (prepared by Niti Aayog) and consider it for drawing up the framework. It (the shift) may take some time…2025 may not be the year.”

Components included in multidimensional poverty are child and adolescent mortality, maternal health, nutrition, cooking fuel, drinking water, housing, sanitation, electricity, bank accounts, years of schooling, school attendance and assets.

The Netherlands currently follows a system of living wages and the ILO has been assessing whether a similar system could be followed in other countries.

Living wages is a minimum income required by a worker and his family to meet their basic needs and have a decent standard of living.

Calculated according to the country's circumstances and the work done by the worker, these wages cover up necessary expenses like food, housing, healthcare, education, and clothing.

According to Financial Express, though minimum wages in India are regulated by the Minimum Wages Act, 1948, it differs in every state.

In India, minimum wages differ according to states, industries, occupations and skills and are classified into three categories -- unskilled, skilled and highly skilled.

In Karnataka, unskilled minimum wages are Rs 15,106 every month whereas a highly-skilled labour would receive Rs 18,941 as minimum wages per month.

According to Financial Express, a partner at Saraf and Partners, Akshay Jain said, "It is imperative that the framework be developed through careful planning and by way of a consultative process involving key stakeholders including employees, policymakers and particularly the industry, to ensure its practicality and overall long-term economic sustainability."

Experts have opined that the introduction of living wages must accompany supportive measures which could enhance skill development and economic policies and also promote job creations and along with economic growth.