Living wage – it takes policy, pricing and participation

The companies that join ETI commit to nine tenets of good labour practice. One of these is that living wages are paid to workers throughout global supply chains. They are supported in their efforts to achieve this Base Code by our NGO and trade union members.

As Fair Pay fortnight draws to a close, there is starting to be real momentum on Living Wage in the UK as the number of British employers becoming living wage employers slowly but steadily increases. According to the Living Wage Foundation "more than 80% of employers believe that the Living Wage had enhanced the quality of the work of their staff, while absenteeism had fallen by approximately 25%". 

But, as Rachel Wilshaw of Oxfam, an ETI member, has pointed out "at the current rate of voluntary adoption [in the UK], it would take 450 years for everyone in London to be earning a living wage." If it will take that long for London – home of the Living Wage Foundation – how long will it take the rest of the world along a global supply chain that stretches from the British high street to the industrial estates and farms of Africa or Southern Asia?

Some of the earliest adopters of the Living Wage in the UK were financial institutions. It wasn’t difficult for such profitable companies to raise the wages of the small numbers of workers (mostly contract cleaners) paid below the living wage. But for a small company in the developing world – like many of those supplying British retailers - the prospect  of paying their core workers more (usually a lot more) is much more challenging, since profit margins are often wafer thin. In countries with large populations, high unemployment and low levels of unionisation, workers have little say in their pay levels. If they complain, there are others to  take their place - even for poverty pay.

Many of the companies, NGOs and trade unions who are working to tackle low wages, like the TUC and Oxfam, are members of ETI,  but achieving the commitment to the principle of a living wage that membership entails, is fraught with difficulty,  

At a recent workshop for ETI members, participants were urged not to be discouraged by the perceived challenges, but to take the first steps by focusing on the underlying causes of low wages and what can be done to tackle them.

The meeting concluded that a tripartite approach to driving change for workers in global supply chains could help make living wages a reality not just in London, but worldwide. Wages are driven by multiple factors, so there are multiple ways they need to be tackled. These could be boiled down to policy, pricing and participation.

Governments need to have policies that move minimum wage levels towards a living wage level. And they need to enforce them. 

Sourcing companies need to pay prices that enable suppliers to afford better wages, but they also need to help their suppliers become more efficient, ensure HR systems are well managed and  support freedom of association. Suppliers themselves need to be willing to ring-fence extra money for wages and ensure it gets through to workers. 

And workers, both men and women, need to feel empowered to participate in negotiations for better wages, with the support and protection of trade unions. 

ETI is committed to supporting our members on the challenging journey towards a living wage. We are now supporting a tripartite group of members (companies, unions and NGOs) to come together and learn from their own and others' experience about how to improve wages across garment and agricultural sectors in today’s complex economic environment. 

They will not come up with a magic bullet for the knotty problem of living wage in multiple, complex contexts, but what’s certain is that everyone involved will learn a lot about ways to work together to get wages moving in the right direction and to sustain that progress until the day workers tell us that they have enough to live on (which is the best test of all!).