A Shift from State Intervention Towards Innovation: Policy Insights from India and Denmark

ABSTRACT

A minimum wage refers to the legally mandated baseline remuneration that an employer must provide to a worker in return for labour rendered within a specific time frame. In the Indian context, this responsibility lies with the “appropriate government”, either the central or state, depending on the nature of employment. However, India’s continuous state-led regulation over various components of wage determination has not effectively resulted in comprehensive labour security or social welfare outcomes. This research explores the structural inconsistencies within India’s minimum wage system and places it in contrast with Denmark’s model. While India, as a developing country, contends with multiple socio-economic barriers to ensuring just and sufficient compensation, Denmark has emerged as a successful welfare state with a minimum wage framework driven primarily by nonstate actors, such as trade unions and employer associations, without direct governmental control. This model has contributed to more consistent worker protection and economic stability. The study further examines how wage policies affect the overall socio-economic advancement for workers in both nations. Denmark’s decentralized and collectively bargained wage-setting mechanism offers valuable insights into achieving equitable labour outcomes with minimal government interference. By learning from Denmark’s experience, the research aims to identify policy recommendations that could help Indian legislators and stakeholders build a more inclusive, fair, and sustainable labour market that promotes worker empowerment and social justice.