In a move aimed at addressing the rising cost of living and improving the welfare of workers, the Central Government of India has announced several key changes to the minimum wage structure, including a shift towards implementing living wages by 2025.
Revised Minimum Wages Effective October 1
The government has recently revised the minimum wage rates for workers, particularly in the unorganised sector, by adjusting the Variable Dearness Allowance (VDA). This revision, which will come into effect from October 1, is designed to help workers cope with the increasing cost of living.
Under the new rates, minimum wage for unskilled workers in sectors such as construction, sweeping, and cleaning will be Rs 783 per day (Rs 20,358 per month). Semi-skilled workers will receive Rs 868 per day (Rs 22,568 per month), while skilled, clerical, and watch and ward personnel without arms will get Rs 954 per day (Rs 24,804 per month). Highly skilled workers and those in watch and ward roles with arms will earn Rs 1,035 per day (Rs 26,910 per month).
Shift from Minimum Wages to Living Wages by 2025
The Central Government has also committed to replacing the current minimum wage system with a living wage framework by 2025, with technical assistance from the International Labour Organization (ILO). This shift is part of a broader effort to ensure that workers earn a wage that allows them to afford a decent standard of living for themselves and their families.
The ILO defines a living wage as "the wage level necessary to afford a decent standard of living for workers and their families, taking into account the country's circumstances and calculated for the work performed during normal hours." This approach contrasts with the minimum wage, which is the lowest amount of remuneration required by law, and does not necessarily cover basic needs such as food, clothing, shelter, and healthcare.
Challenges and Benefits of the New System
Implementing a national living wage framework poses several challenges, including the need to account for varying living costs across different regions of India. However, the government is committed to this change as part of its efforts to achieve the Sustainable Development Goals (SDGs) by 2030, particularly the goal of promoting decent work and economic growth.
Despite the challenges, the shift to living wages is seen as a strategic move to accelerate poverty alleviation efforts. With over 500 million workers in India, 90% of whom are in the unorganised sector, this change could significantly impact the lives of millions of workers.
Political and Social Implications
The Congress party has been advocating for a higher minimum wage, calling for a nationwide minimum wage of Rs 400 per day. This demand is part of their Lok Sabha election manifesto, which includes promises to review labour codes, curb the contractualisation of labour, and provide employment guarantees for urban areas.
The current average wage under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) for the financial year 2024-25 is around Rs 284 per day, up from Rs 267 the previous year. However, these wages remain below the recommended need-based minimum wage of at least Rs 375 per day suggested by an expert committee in 2019.
Conclusion
The Central Government's decision to revise minimum wages and transition to a living wage system marks a significant step towards improving the economic and social well-being of Indian workers. While there are challenges ahead, the commitment to ensuring that workers earn a wage that allows them to maintain a decent standard of living aligns with India's broader development goals and its obligations as a member of the ILO. As the country moves forward with these changes, it will be crucial to balance the needs of workers with the economic viability of businesses to ensure a sustainable and equitable implementation of the new wage policies.
