India's Transition to a Living Wage System: A Path Towards Economic Equity

Implications and Significance 

India is poised to undergo a significant transformation in its wage system, transitioning from a minimum wage structure to a living wage system by the year 2025. This transition marks a pivotal moment in the nation's economic policy, aiming to enhance the well-being of its workforce and drive inclusive growth. Let's delve into the implications and significance of this transition.

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ILO Endorsement and Government Initiative

The decision to shift towards a living wage system is bolstered by the recent endorsement of the International Labour Organisation (ILO). Following agreements reached during expert meetings on wage policies, the ILO's governing body ratified the endorsement on March 13. This signifies a global recognition of the importance of ensuring fair wages for workers.

Addressing Poverty and Inequality

One of the primary goals of adopting a living wage system is to uplift millions of workers out of poverty. In India, where over 500 million individuals are employed, predominantly in the unorganised sector, this transition holds the potential to significantly improve livelihoods. Despite existing minimum wage standards, discrepancies in wage payments persist due to inadequate enforcement across states.

Legislative Framework and Universal Wage Floor

India's legislative efforts in this regard are noteworthy. The passage of the Code on Wages in 2019 laid the groundwork for a universal wage floor applicable across all states once implemented. This represents a crucial step towards standardizing wage policies and ensuring equitable compensation for labor.

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Empowering Workers and Promoting Sustainable Development

By embracing the concept of living wages, India demonstrates its commitment to promoting decent work and economic growth, in line with the Sustainable Development Goals (SDGs). A living wage, tailored to the country's circumstances, ensures that workers can afford a decent standard of living for themselves and their families. This not only enhances individual well-being, but also fosters sustainable economic development.

Economic Viability and Growth Trajectory

India's robust economic growth, with a projected rate of 8.4%, underscores the country's capacity to support higher wages. By investing in its workforce and ensuring fair compensation, India can stimulate domestic consumption and drive economic prosperity.



India's transition from minimum wages to living wages signifies a landmark shift towards a more equitable and sustainable wage system. As the country prepares to implement this change by 2025, it underscores a commitment to prioritizing the welfare of its workers and advancing inclusive growth. With the support of international organizations like the ILO, India is poised to set a precedent for progressive wage policies that prioritize human dignity and economic prosperity.

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