Determining a Fair Minimum Wage in India: A Data-Driven Approach

The unorganised sector is massive, with an estimated over 400 million workers involved in informal or non-registered employment. This includes workers in agriculture, construction, retail, domestic work, and other sectors. Estimated around 90% of India’s Total Workforce. The formal sector only employs about 10% of the workforce, making the unorganised sector the dominant segment of employment in India. Despite being informal and largely under-regulated, the unorganised sector contributes a substantial 50% of India's Gross Domestic Product (GDP). This reflects its importance in driving economic activity, especially in agriculture, construction, textiles, small-scale manufacturing, and retail.

The unorganised sector in India refers to industries and workers that are not regulated by the government in terms of employment benefits, job security, or legal protections. This sector includes informal employment with no fixed wages, social security, or work contracts.

Unorganised Sectors in India

1. Agriculture & Allied Activities – Farming, fishing, forestry, animal husbandry.
2. Construction – Daily wage laborers, masons, plumbers, electricians.
3. Retail & Street Vendors – Small shop owners, roadside vendors.
4. Transport – Rickshaw pullers, auto drivers, delivery personnel.
5. Domestic Work – Maids, cooks, caregivers.
6. Textile & Handicrafts – Handloom workers, artisans, weavers.
7. Small-Scale Manufacturing – Cottage industries, leather, ceramics.
8. Mining & Quarrying – Daily wage laborers in mines.
9. Hospitality & Tourism – Workers in dhabas, lodges, and roadside eateries.
10. Recycling & Waste Management – Ragpickers, scrap dealers.

Earnings in the unorganised sector are typically much lower than those in the formal sector. The wages are irregular, and workers often earn on a daily or piece-rate basis, meaning income fluctuates based on work availability and demand. Workers in the unorganised sector typically lack job security and do not receive benefits.

What’s the Solution?

To begin with, improving wages and working conditions is essential for uplifting the unorganised sector.

?? Enforcing Fair Minimum Wages

• Establish and implement a standardized minimum wage across all industries in the unorganised sector to prevent worker exploitation.
• Develop wage tracking mechanisms to monitor compliance and address violations effectively.

?? Enhancing Health & Safety Benefits

• Provide affordable health insurance to all informal workers, ensuring access to medical care.
• Strengthen workplace safety regulations in high-risk industries such as construction, mining, and waste management to protect workers' well-being.

How to Arrive at a Fair Minimum Wage in India?

Setting a fair minimum wage in India requires a data-driven approach that considers the cost of living, industry standards, and economic sustainability.

Calculate Basic Living Costs (Living Wage Approach)

A fair wage should cover a worker’s essential expenses, including:

• Food per person/month.
• Housing & Utilities –for urban areas.
• Healthcare & Education – Medical expenses, school
• Transport & Miscellaneous – Commuting, clothing, savings

Estimated Monthly Living Wage per Worker

• Rural India:
• Urban India:

Solution: The minimum wage should be linked to inflation and revised annually to maintain purchasing power.

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