Minimum wage V/S living wage

What are your views on India planning to replace minimum wage by living wages by 2025? Will the government be able to implement it successfully in a country like India where the cost of living varies significantly across different regions of the country?

It will be challenging but govt. should consider it with careful planning and consideration. After all it is in use in different states and regions

In summary, while the shift from minimum wage to living wage is commendable, its success will depend on effective policy design, stakeholder collaboration, and adaptability to India’s diverse socio-economic landscape. The government’s commitment to this transition will play a pivotal role in achieving equitable wages for all workers.

Originally posted by: Minisinghrajput

I agree that forcing companies to pay minimum wage would lead to some adverse effects like putting a hold to any growth plans, some businesses, especially small and medium enterprises may face financial strain due to increased labour cost and companies might start laying off employees to keep their profits in check which would actually lead to unemployment.

But workers' concerns are that India's minimum wage which is ₹176 is insufficient to meet basic needs, especially with inflation and to make things worse it's not even a legal requirement so states can act as they wish. And the International Labour Organization(ILO) have highlighted that fair wages are necessary for economic development and for reducing poverty and inequality. I think it's important for the successful implementation of this policy to consider both, affordability for businesses and ensuring employees well being.

 And many economists have also said that Countries which have increased their minimum wage have not suffered from unemployment as a result and many businesses which have increased their minimum wage payout have experienced that higher employee morale have actually resulted into better outcomes for their businesses. 

Again, answer to this: market forces.  Labor, like everything else, is a function of supply & demand.  If supply >>> demand, you have pressure on wages.  If demand >>> supply, then that profession turns out to be pretty lucrative.  If there were a billion core Java programmers, those people would get paid about as much as household maids

For instance, in Kolkata, where unemployment is still very high, one can't get domestic help below a certain threshold: neither will people come from far away, and within the city, people already know the rates.  That forces people who must have such workers to either pay more, or negotiate what services any part-time wages cover. Or let's say that a household needs plumbing services.  They can shop around, get a dirt cheap plumbing service and later discover the shoddy worksmanship: that will force them to increase what they'd be willing to pay

On the demand side, the way to get it up is to encourage market forces, w/ de-regulation, to promote more employement.  That, and also crack down hard on illegal immigration eg Rohingyas, Bangladeshis,...  Once you limit the labor pool to only Indian citizens (and CAA refugees), you have set limits on the supply, and once you boost the demand, you have set the conditions for wages to increase

Only when you have free agents on both sides do you have a win-win situation.  Any win-lose or lose-win will, as Steven Covey pointed out, end up in a lose lose

Good discussion! Most economists would agree that supply and demand is of course one of the primary drivers for wage determination. That said, governments can easily employ various measures to artificially increase demand in the economy. For instance, they could increase spending on infrastructure projects, education, healthcare, and other public services. They could also provide subsidies or tax incentives to certain industries or sectors to stimulate demand for their products or services. Or, they could simply restrict imports of certain goods and services which would stimulate demand for domestically produced goods.

A well meaning government is capable of doing a lot more than we have come to expect :)

Originally posted by: Minisinghrajput

What are your views on India planning to replace minimum wage by living wages by 2025? Will the government be able to implement it successfully in a country like India where the cost of living varies significantly across different regions of the country?

Won't work.  Real wages are determined  by market forces

When govt tries to peg wages at any level, what it does is:

➤  Cause companies/people who employ people below that level to shed those workers.  How are those workers better off unemployed at those higher rates?

➤  Force companies/people to put on hold any growth plans.  Just duplicate that several fold, and tell me what you think the effect on the overall GDP will be.  All that crowing that we hear about India matching France or Britain in GDP (that too, not per capita), will be a thing of the past

If they wanna encourage growth, start by reducing regulations, and improving business environments.  Also, have rule of law for businesses that are unethical, try to cheat, but aside from that, don't interfere w/ how businesses work & run

I agree that forcing companies to pay minimum wage would lead to some adverse effects like putting a hold to any growth plans, some businesses, especially small and medium enterprises may face financial strain due to increased labour cost and companies might start laying off employees to keep their profits in check which would actually lead to unemployment.

But workers' concerns are that India's minimum wage which is ₹176 is insufficient to meet basic needs, especially with inflation and to make things worse it's not even a legal requirement so states can act as they wish. And the International Labour Organization(ILO) have highlighted that fair wages are necessary for economic development and for reducing poverty and inequality. I think it's important for the successful implementation of this policy to consider both, affordability for businesses and ensuring employees well being.

 And many economists have also said that Countries which have increased their minimum wage have not suffered from unemployment as a result and many businesses which have increased their minimum wage payout have experienced that higher employee morale have actually resulted into better outcomes for their businesses. 

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