India plans on replacing minimum wage with living wage by 2025; All you need to know

In a significant step to fight poverty, India is planning on transitioning from minimum wage to living wage by the year 2025. The shift will have the backing of International Labour Organization (ILO), which will offer technical assistance in creating a framework for estimation of operation of these wages.

Reportedly, ILO has been consulted for capacity building data collection and analysis and demonstration of the positive economic impacts that living wages have.

As per stats earlier this year, the number of Indians living in extreme poverty declined from 3.3% in 2022 to 2.4% in 2024, owing to numerous upliftment programmes and so on.

Minimum wages, as the name goes, is the smallest remuneration paid to employees by their employers. The payment cannot, legally, be lower than this decided wage. ILO defines, "the minimum amount of remuneration that an employer is required to pay wage earners for the work performed during a given period, which cannot be reduced by collective agreement or an individual contract... The purpose of minimum wages is to protect workers against unduly low pay."

However, living wages is an amount that is capable of affording a basic standard of living. "Every worker has a right to a wage adequate to maintain a reasonable standard of life, having regard to the civilisation of his time and country." This renumeration helps pay for fundamental needs like food, housing, healthcare, education of children and clothing.

The Fair Wages Committee had defined three wage levels, namely living wage, fair wage and minimum wage. Herein, the living wage category is seen to be the highest level that covers a range of social expenditures. "Fair wage, envisaged as between the living wage and the minimum wage, includes subsistence plus standard wage."

According to the India Wage Report, low pay and wage inequality poses a serious threat in the country’s path to reaching decent working conditions for people and inclusive growth. The overall aim of the move is to help innumerable people, living below the poverty line, achieve a bare minimum standard of living.