GS3 – Economy
Context
The Ministry of Labour & Employment is exploring a living wage policy to reflect real household expenses. One key goal is to enhance the participation of women in the formal workforce.
What is a Living Wage?
- Definition: A wage that fully meets a household’s basic needs—such as food, housing, health, education, and a buffer for emergencies—ensuring a decent standard of living.
- Difference from Minimum Wage:
- Minimum Wage: Legally mandated wage floor.
- Fair Wage: Typically negotiated between employer and employee.
- Living Wage: Calculated based on actual household expenses and local price levels.
- Assumption: Usually considers a single adult earner supporting a family with two children.
Global Perspective
- The International Labour Organization (ILO) and the United Nations regard the living wage as a fundamental human right, tied to dignity and well-being.
Benefits for Women
- Economic Visibility: Recognises unpaid care work as part of the economy.
- Barriers Reduced: Makes workforce entry more viable by covering basic costs.
- Job Stability: Women receiving fair wages are more likely to remain in formal employment.
- Poverty Reduction: Eases reliance on public welfare by improving household income.
- Gender Justice: Helps bridge gender wage disparities and values care responsibilities.
- Macroeconomic Growth: Increased female labour force participation enhances national productivity.
- Empowerment: Improves women’s decision-making roles within families and communities.
Implementation Challenges
- Regional Price Differences: Cost variations across states complicate a single national wage standard.
- Data Deficiencies: Limited granular data makes wage estimation less accurate.
- Employer Resistance: Smaller enterprises may struggle to absorb increased wage costs.
- Enforcement Weakness: Informal sector, employing most women, often escapes regulation.
- Legal Ambiguities: Overlapping or outdated labour laws complicate enforcement.
- Inflation Concerns: Wage hikes without corresponding productivity gains may spur inflation.
- Lack of Support Services: Absence of essential services like childcare and safe transport reduces effectiveness.
Way Forward
- Data-Driven Indexing: Base wages on region-specific household cost estimates using tools like the Anker Methodology.
- Stakeholder Dialogue: Promote institutional mechanisms for consensus among government, workers, and employers.
- Digital Compliance: Leverage digital tools for real-time wage tracking and enforcement.
- Support Infrastructure: Expand services like women-centric industrial housing and affordable childcare.
- MSME Support: Provide tax incentives or subsidies to help small firms meet new wage standards.
- Legal Reforms: Remove outdated work-hour restrictions and gender-biased provisions from labour codes.
Current Patterns in Women’s Work and Wages
- Wage Disparity: Women earn roughly 70% of what men earn in industrial jobs.
- Participation Rate: Around 33%, pointing to underutilised human capital.
- Savings Deficit: 80% of working women save less than ₹2,000 monthly.
- Job Informality: Just 2.4% of women have salaried jobs with social security.
- Retention Trends: Women earning ₹20,000 or more are 21% more likely to stay in formal employment.