The government has urged the International Labour Organization (ILO) to include the factors that assess “multidimensional poverty” among individuals, in their framework of “living wages”, according to official sources.
The suggestion holds significance as the government is considering to shift to living wages in place of minimum wages in the coming years. The shift to living wages, however, may not happen in 2025.
“A framework for living wages has to be prepared first, which the ILO has to do,” an official said. “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,” the person added. “It (the shift) may take some time…2025 may not be the year.”
Multidimensional poverty includes factors such as nutrition, child and adolescent mortality, maternal health, years of schooling, school attendance, cooking fuel, sanitation, drinking water, electricity, housing, assets, and bank accounts.
Currently, Netherlands has a system of living wages, and ILO is assessing whether that could be replicated in other countries as well, the sources said.
As per ILO, living wages are the wages necessary to ensure a decent standard of living for workers and their families, taking in account the country’s circumstances and calculated for the work performed during “normal hours”. In other words, these wages are the minimum income required for a worker to cover essential expenses, such as housing, food, healthcare, education, and clothing. These wages are likely to surpass the basic minimum wages standards, say sources.
At present, minimum wages in India are regulated by the Minimum Wages Act, 1948. Minimum wages differ across states, and across three categories – unskilled, skilled, and highly skilled. For instance, in Karnataka, an unskilled worker gets Rs 14,424 per month as minimum wage, while a highly skilled worker gets Rs 18,260. For Jharkhand, the respective wages are Rs 8,996 and Rs 14,351. These wages are mandated to be revised every five years.
Experts say that a framework of living wages accounting for multidimensional poverty indicators holistically, would better reflect the true cost of living and the necessary income required to achieve a decent standard of living.
“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,” said Akshay Jain, Partner at Saraf and Partners.
Also, the adoption of living wages should be accompanied by supportive measures such as enhanced social security coverage, skill development initiatives and economic policies that promote job creation and economic growth, say experts.