Mint Explainer: How workers will benefit from living wages
Mint explains why the adoption of the living wage system will be pro-workers. According to the ILO, a living wage is the wage level that is necessary to afford a decent standard of life for workers and their families. It takes into account the economic circumstances of a country and is calculated for the work performed during the normal hours of work.
It is usually higher than the minimum wage set by governments because it considers the cost of food, housing, health, education, transportation, clothing, other essential goods and services and provision for unforeseen events. The determination of living wages also considers the average size of a household and the number of earning members. However, there cannot be a one-size-fits-all solution to the wage-setting process, the ILO has cautioned.
The setting of minimum wages in India does not take such a holistic approach though the consumer price index which is a measure of the cost of living is considered. The minimum wages are notified by the central and state governments and may undergo annual revision. The ILO estimates that India notifies about 2,000 minimum wage rates across sectors of employment and workers’ skill levels.
About 50 of these wage rates are notified by the central government and the rest by states. As living wages are meant to ensure a basic and decent life for a worker’s family, they tend to be much higher than the notified minimum wages. Just as minimum wages for the same work vary from state to state, living wages too will vary from state to state and even district to district.
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