India is reportedly considering shifting from minimum wage to living wage by 2025.
It is a move that would align with an agreement reached by a UN agency. The move may affect the operating costs of foreign companies in the South Asian country.
After the International Labor Organization (ILO) reached a consensus regarding the living wage on March 13, the Economic Times quoted an unnamed Indian government official saying that the country is preparing to replace the minimum wage with a living wage by 2025. The source told the Economic Times that living wages may be set at higher than basic minimum wages.
According to Sumita Dawra, the Labor Secretary of India, India has requested assistance from ILO in capacity building, systematic data collection, and gathering evidence on the positive economic impacts arising from the implementation of living wages. According to ILO, a living wage level is deemed essential to ensure workers and their families can maintain a decent standard of living, considering the specific circumstances of each country.
A living wage is calculated based on the work performed during regular working hours, adhering to the organization's principles for estimating such wages. In India, the disparity in minimum wage rates across states poses a challenge for foreign companies seeking to establish offices or facilities within the country.
Unlike implementing a uniform national standard, each state in India sets its minimum wage, contributing to complexities for businesses navigating the diverse regulatory landscape. The minimum wage regulation fell under the jurisdiction of the Minimum Wages Act of 1948.
Although India notified the Code on Wages Act in 2019, trying to replace four labor regulations, including the Payment of Wages Act of 1936, the Payment of Bonus Act of 1965, and the Equal Remuneration Act of 1976, in addition to the Minimum Wages Act of 1948, the Code on Wages Act has not been implemented since notification.
Minimum wages in India state and terrotories | |||
Highly skilled | Highly skilled | Highly skilled | Highly skilled |
Andaman and Nicobar Islands | 13988 | 17680 | 19188 |
Arunachal Pradesh | 6600 | 7200 | NA |
Assam | 9246.1 | 13430.85 | 17265.55 |
Bihar | 10270 | 13000 | 15886 |
Chhattisgarh | 10,100 (Zone C) | 11,530 (Zone C) | 12,310 (Zone C) |
10,360 (Zone B) | 11,790 (Zone B) | 12,570 (Zone B) | |
10,620 (Zone A) | 12,050 (Zone A) | 12,830 (Zone A) | |
Dadra and Nagar Haveli | 9237.8 | 9653.8 | NA |
Daman and Diu | 9237.8 | 9653.8 | NA |
Delhi | 17494 | 21215 | NA |
Goa | 10790 | 13728 | NA |
Gujarat | 12,012-12,298 | 12,558-12,870 | NA |
Haryana | 10532.84 | 12802.69 | 13442.82 |
Himachal Pradesh | 11250 | 13062 | 13592 |
Jammu and Kashmir | 8086 | 12558 | 14352 |
Jharkhand | 8996.34 | 12423.87 | 14351.39 |
Karnataka | 14424.63 | 16858.07 | 18260.2 |
Madhya Pradesh | 9825 | 12060 | 13360 |
Maharashtra | 12699 | 14310 | NA |
Nagaland | 5280 | 7050 | NA |
Punjab | 10353.77 | 12030.77 | 13062.77 |
Rajasthan | 6734 | 7358 | 8658 |
Tripura | 7277 | 8928 | NA |
Uttar Pradesh | 10275 | 12661 | NA |
Uttarakhand | 9,913-10,031 | 11,070-11,218 | NA |
West Bengal | 9784 | 11804 | 13023 |
Source: India Briefing, March 2024
