India: Strengthening minimum wage systems to address regional disparities

India’s wage-setting system is shaped by a complex, multi-tiered structure, with wage responsibilities shared between the central and state governments. This division of power allows each state to set its own minimum wages, leading to significant regional disparities. India’s vast economic and geographic diversity further complicates the implementation of consistent wage policies, as well as its compliance, particularly in the informal sector, where many workers still earn below the minimum wage.

In response to these challenges, the SAW Project has been instrumental in supporting meaningful wage policies and interventions across four key states—Assam, Jharkhand, Telangana and Tamil Nadu. The project has already achieved concrete results in Assam by strengthening wage-setting institutions and promoting evidence-based social dialogue around minimum wage policies that ensure a wide coverage of workers and their protection across diverse sectors. The project has engaged with stakeholders in other states to support them in addressing wage policy challenges in traditional industries and emerging sectors like gig and platform work.

Four States, One Goal: Strengthening minimum wage systems

The SAW project operates in four Indian states—Assam, Jharkhand, Telangana and Tamil Nadu—each selected for their distinct regional characteristics. The diversity across these states highlights the complexity of labour market institutions and wage-setting mechanisms in India, where a one-size-fits-all approach is ineffective. The SAW project’s tailored interventions, based on state-specific data, address the diversity of India’s labour market and work to strengthen minimum wage systems, driving progress towards adequate wages.

Assam: pioneering data-driven wage setting

Assam, a northeastern state with a long-standing tradition of collective bargaining by its tea plantations, has made significant strides with the SAW project. In particular, the project has successfully strengthened the state's Minimum Wage Board, facilitating data-driven dialogues between government, trade unions, and employers. For the first time, minimum wage setting in Assam is based on scientific data, incorporating both the needs of workers and their families, as well as other economic factors. This not only strengthens the current process but more importantly, helps the government and the state align the Minimum Wage policy with international labour standards.

A landmark achievement includes the formal integration of domestic workers—many of whom are women—into the minimum wage framework. For the first time, domestic workers in Assam are guaranteed a minimum wage, providing vital protections to one of the most vulnerable sectors in the workforce.

Telangana: establishing the foundation for reform

Telangana, a state with a burgeoning IT and pharmaceutical industry, initially lacked a functional Minimum Wage Board. Through the SAW project’s support, the Minimum Wage tripartite board has been established, with ongoing efforts to appoint its members. In agreement with the government about the need for data-driven social dialogue, a study on workers’ needs and economic factors has been initiated to ensure that, once fully operational, the board can make informed decisions.

Telangana’s minimum wage-setting system is further complicated by the existence of over 2,000 minimum wage categories. This fragmentation hinders compliance, making it difficult for both employers and workers to understand wage requirements. The SAW project has taken steps to support dialogues focused on streamlining these categories, making wage enforcement more manageable and laying a foundation for a stronger minimum wage system.

Jharkhand: expanding wage protection to new sectors

In Jharkhand, the SAW project has proactively facilitated social dialogue around minimum wage setting. On the request of the government, the project is also providing support to guarantee wage protections to emerging sectors, such as gig and platform workers, setting an important precedent for other states. The project is in discussion with the government on ways to strengthen the compliance system going forward.

Tamil Nadu: navigating a complex wage structure

Tamil Nadu’s wage-setting mechanisms are fragmented, with multiple wage boards for different sectors, such as textiles and domestic workers, and thus involving different processes. The SAW project is working to unify and streamline these processes, introducing evidence-based decision-making into the system. The project’s efforts in Tamil Nadu are focused on establishing consistent wage policies across sectors, building a minimum wage framework that is both equitable and enforceable.

The Power of Dialogue and Evidence-Based Decision-Making

A central focus of the SAW project is fostering dialogue between key stakeholders—government, employers, and workers. This dialogue is crucial for consensual decisions around minimum-wage setting, as well as addressing regional/sectoral disparities in wage-setting processes. By incorporating state-specific data on the needs of workers and economic realities–information completely missing until now—the project ensures that minimum wage policies are relevant and responsive to real situations as well as regional challenges. In Assam, for example, the Minimum Wage Board now uses evidence on workers' living conditions and economic factors to inform its decisions—a practice that the SAW project aims to replicate in other states.

Conclusion: Building a fairer minimum wage system in India

The SAW project has made significant progress in its first 15 months, laying the foundation for evidence-based wage policies that promote fair wages across India’s diverse regions. By aiming to strengthen minimum wage systems in Assam, Jharkhand, Telangana and Tamil Nadu, the project serves as a model for effective, region-specific wage setting for remaining states in the country to follow. As the SAW project continues its work, it is helping to build a fairer wage-setting system that reflects both the economic realities and essential needs of workers across India, regardless of their sector or location.