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The living wage journey may not be an easy one to contemplate, but it is one all companies that have committed to the ETI Base Code must embark on. With growing global pressure to improve wages, there is also growing global support. If taken one step at a time, and if taken together with others, it is certainly not an impossible journey. And the destination is one that will benefit everybody in the supply chain and make it a stronger, healthier and more resilient one. ETI launches a new guide designed to help you start on that journey.
This week we launch the second in our Base Code guidance series – Living Wages.
The guide summarises the analysis shared in last year’s joint ETI publication, A New Agenda for Business. It merges this analysis with the concrete actions recommended by the 2013 European Conference on Living Wages, by Oxfam, in its ‘Steps towards a Living Wage’ and in ETI’s own interim guidance and expectations of its members in relation to living wages.
Together they provide a step by step guide to helping create an enabling environment for living wages in global supply chains.
Wages operate in a complex landscape
Clause 5, ‘Living wages shall be paid’, is one of the most challenging of the ETI Base Code clauses. This is because the main cause of low wages is rooted in the very structure of much international trade: the reliance on plentiful, cheap and malleable labour.
Countries like Bangladesh, India and China have long used this principle to boost their economies through competitive international trade, particularly in the garment and agriculture sectors. The guide illustrates the complex landscape in which wages operate, and which parts of it companies can influence.
So, realistically, there is little that individual companies can do to make lasting changes in the wages of workers in their supply chains. That’s why the guide recommends that, once they have put their own house in order, companies should collaborate – with each other, with their suppliers, with government, with trade unions, with NGOs, with industry associations…
By working together, they can start to transform the landscape from one that feeds on the exploitation of low-paid, over-worked undernourished workers to one that thrives on a well-paid, skilled and stable workforce. The guide gives examples of collaborative initiatives aiming to bring about just such a transition in their respective industries and explains how to find local partners.
Workers’ rights to living wages are enshrined in international standards
Workers who enjoy their right – enshrined in international standards – to earn enough to live and support their families on, can work more efficiently and can afford to buy the goods they make, can pay taxes, educate their children, save for emergencies and for the future... Everybody wins. The guide presents a new worker wellbeing matrix that graphically illustrates the crippling dimensions of earning below a living wage, and the liberating power of a living wage.
A fundamental principle underlying living wages is enabling workers to negotiate for the wages that they need. The guide explains the importance of freedom of association and collective bargaining, recommends how to support this in global supply chains and provides contact details of global trade union federations that can connect you with local trade unions.
Companies must put their own house in order
But let’s go back to companies putting their own house in order. This starts with becoming a Living Wage employer. And no, that doesn’t mean paying the UK’s minimum wage for over 25’s, which is misleadingly called the ‘national living wage’. It means paying the rate set by the Living Wage Foundation). Not to do so while calling for living wages in global supply chains would be seen as hypocrisy and would undermine the company’s credibility. The guide gives quotes from ETI member companies who are accredited Living Wage employers.
Putting their own house in order also means companies having a good honest look at their purchasing practices and sourcing strategies and understanding how much these contribute to keeping wages low, working hours high and jobs unsteady. The guide makes some recommendations for how to approach this – and more support is on the way.
More guidance for your living wage journey is on the way
The ETIs of UK, Norway and Denmark are conducting a widespread survey this summer – possibly the biggest survey of its kind - to gather evidence of how exactly purchasing practices impact on working conditions. We will use this evidence to bring you, jointly, an updated version of ETI Norway’s popular ‘Suppliers Speak Up’ guide and training course.
Purchasing practices is one of the four key skill areas that are critical to creating an enabling environment for living wages. The others are working hours (the first in the Base Code guidance series), workers’ voice and representation and influencing governments. ETI offers guidance and training on the first three, and can help convene companies and other organisations to influence governments on wage issues. We were part of a successful collaboration in Myanmar in 2015, resulting in better wage deals for tens of thousands of garment workers.
A journey of a thousand miles, even a daunting one, begins with the first step. We hope that the ETI living wage guide will help you take the first step of your living wage journey, and will accompany you all the way.