Mobile Nav
Shift

Living wages

The provision of living wages for workers in global value chains could contribute to supporting entire families and communities in surfacing from conditions of poverty, fueling the economic and social development called for by both public and private actors in their endorsement of the SDGs.

Living wages graphic

 

 

Every day, workers head to factories, fields, mines, warehouses and other job sites across the world. There, they put in a full day’s work, contributing their time and labor to ensure the smooth running and expansion of businesses and, in many cases, the development of national economies as well.

More than 340 million workers are currently living with their families on less than US$1.90 per person per day.Yet, despite this contribution, day in and day out, many of these workers go home at the end of their long work days and still struggle to meet their basic needs and those of their families. Minimum wage laws in their countries may be weak or unenforced. The wages and any in-kind earnings they do receive are simply not enough to cover essentials such as nutritious food, clean water, sanitary housing, affordable health care, and opportunities for education.

The private sector’s role in these workers’ lives is immense. Wage-setting by employers – which in turn is regulated by governments and often influenced by the purchasing practices of those employers’ business partners – directly impacts the ability of these workers to live lives of dignity, through which their most basic rights as human beings are met.

Given this role, companies across sectors and geographies are asking, “What exactly is a living wage?” and “How can the provision of living wages be realistically achieved?”

In general terms, a living wage is the minimum income necessary for a worker and their family to meet basic needs, including some discretionary income. In many cases, a living wage is considered to be higher than the minimum wage set by national laws.

What this looks like in practice is very likely to vary across contexts and even within countries. But, as the case studies below aim to demonstrate, there are credible processes out there that are starting to set and implement living wages in real ways.

The provision of living wages for workers in global value chains could contribute to supporting entire families and communities in surfacing from conditions of poverty, fueling the economic and social development called for by both public and private actors in their endorsement of the SDGs.

Among others, the human rights to freedom of association, collective bargaining and non-discrimination are key drivers in supporting the provision of a living wage, which in turn can contribute to the fulfillment of the human rights to food, water, health, adequate housing, education, family life, fair working hours and so on.

As illustrated in the graphic above, and depending on the specifics of the relevant corporate initiative, the provision of a living wage may contribute to the achievement of an array of Global Goals, including:

  • Goal 1: End poverty in all its forms everywhere[i]
  • Goal 2: End hunger, achieve food security and improved nutrition and promote sustainable agriculture[ii]
  • Goal 3: Ensure healthy lives and promote well-being for all at all ages[iii]
  • Goal 4: Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all[iv]
  • Goal 5: Achieve gender equality and empower all women and girls[v]
  • Goal 6: Ensure availability and sustainable management of water and sanitation for all[vi]
  • Goal 7: Ensure access to affordable, reliable, sustainable and modern energy for all[vii]
  • Goal 8: Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all[viii]
  • Goal 10: Reduce inequality within and among countries[ix]
  • Goal 11: Make cities and human settlements inclusive, safe, resilient and sustainable[x]
  • Goal 13: Take urgent action to combat climate change and its impacts[xi]

More than 450 million people work in global supply chain-related jobs. When combined with these workers’ families, the number of individuals directly affected by wage-setting in global value chains rises to 2 billion.

So, how are companies currently demonstrating respect for human rights and supporting a world in which these goals can become a reality – a world in which workers earn living wages such that they and their families are meeting their basic needs?

 Examples illustrated by the case studies below include:

These case studies explore each of these innovative and evolving models in more detail. Each case study captures publicly available information on the initiative, alongside experiences and opinions from various actors involved.

The following summaries do not claim to give a definitive account of a specific initiative or of all perspectives on that case study; instead, they are intended to serve as illustrative examples of how action toward corporate respect for human rights can make a critical contribution to the achievement of various goals and targets under the SDGs. 

Case studies on living wages

H&M’s Fair Living Wage Strategy

Improving wage management systems and industrial relations as a global brand

Egedeniz Textile’s Living Wage Project

Driving the provision of a living wage from the producer perspective

ACT (Action, Collaboration, Transformation)

Tackling systemic worker issues through industry collective bargaining

Malawi Tea 2020

Joining forces at a national level to address root causes of endemic poverty

Key takeaways on living wages

Individual company action

  1. The human rights to freedom of association and collective bargaining play central roles in company action on living wages.

  2. Mature industrial relations are key in figuring out what a living wage means in a particular context and in generating feedback loops that help maintain the provision of living wages over time.

  3. Improved wage management systems and more comprehensive strategies for promoting fair wages can address many elements that influence whether a living wage is provided in the long-term. Such elements include timeliness of payments; fair working hours; pay adjustments based on skills, experience levels and performance; and open communication channels between workers and management.

  4. Collaborative initiatives that drive systemic change at both industry and government levels can greatly inform and enhance individual company action on living wages.

  5. Producer-buyer partnerships are possible and can facilitate direct involvement from workers in determining living wages in specific work sites, thereby having a real impact on the lives of workers and their families via the provision of a living wage while collaborative initiatives with a larger scale are built at a national level.

Collective action

  1. Industry-wide, collaborative action across each step in the supply chain builds leverage (the ability to influence another party to prevent, mitigate and/or remediate a human rights harm) at the national level to help make living wages a reality for workers, regardless of which brands their employers supply.

  2. Collective bargaining across an industry bolsters meaningful stakeholder engagement between employer associations and trade unions, as well as between suppliers and buyers, while also facilitating access to remedy when commitments are not met.

  3. The re-examination of key aspects of the core business, including product quality investment and purchasing practices, can clarify the contribution of global brands to systemic labor rights issues and inform holistic responses.

  4. The identification of particularly vulnerable stakeholders helps companies focus their efforts on the most salient human rights issues associated with their business.

  5. Recognizing that living wages cannot be tackled in isolation inspires multi-faceted approaches that use a confluence of different incentives to drive change from many angles.
Close Overlay