Living wage - how much is enough?

The United Nations, the International Labour Organisation, the TUC and a host of campaigning organisations, NGOs, unions and political parties agree; the amount you are paid for your work should be enough to live on.

That seems quite simple and uncontroversial.

The ETI Base Code, too, requires that wages “should always be enough to meet basic needs and to provide some discretionary income.” Many of the other organisations working on this issue say that it should be enough to support a worker and his or her family.

But how much is “enough”? And what are “basic needs”? And how much “discretionary income” exactly? And what is a typical “family”?

Basic needs are obviously food, shelter and housing. Perhaps health and education too. But some may also consider electricity, running water or even television and broadband to be basic needs. In some cultures you are responsible for the wellbeing of your extended family, clan or tribe not just your spouse and children. And family sizes and the cost of goods and services change constantly.

So maybe it’s not quite so simple. Neither is it uncontroversial.

Economic forces – and the power relations between workers and employers – determine the level of wages people are paid. Economists argue that simply imposing higher wages could price vulnerable people out of work; as well as job losses, there could be poorer working conditions, fewer in-work benefits and higher prices for consumers.

But just because it is difficult, we should not give up on a living wage. It remains an important and morally compelling issue. Without a living wage, workers are often forced to work excessive overtime hours, hold down several jobs, send their children into work or become bonded labourers through a vicious spiral of debt.

That is why campaigning organisations like Labour Behind the Label, the Fair Wear Foundation, the TUC and the World Banana Forum are putting pressure on companies to ensure that workers in their supply chains are paid a living wage – or at least work towards this. And many companies are taking the initiative to do so. For example, ETI member M&S has made a commitment to “ensure our clothing suppliers are able to pay workers a fair living wage in the least developed countries we source from, starting with Bangladesh, India and Sri Lanka by 2015.” 

The UN’s Guiding Principles on Business and Human Rights state that businesses have the responsibility to respect human rights, and this includes paying a living wage. ETI supports its members in fulfilling this responsibility by providing access to tools, resources and the latest thinking on living wage, facilitating discussion to explore the underlying issues and to share learning on practical ways of getting wages moving upwards.

Keep an eye on the ETI blog during Living Wage Week as we post insights from a broad range of living wage thinkers and actors on this complex and compelling challenge.