Living wages – taking the leap of faith

As part of our pre-20th Anniversary Conference series of blogs, economic justice consultant Sabita Banerji, considers the payment of ‘living wages’ as she discusses what progress has been made since ETI’s last conference in 2015.

In 2015 companies, trade unions and NGOs were brought together by ETI, UN Global Compact and KPMG, to explore the proposition that living wages were “desirable, feasible, [and] inevitable.”

We never said it would be easy. Or quick.

Three years on and, although some collaborations are making progress, we are still a long way from the tipping point of the majority of workers in global supply chains – or even in buying countries – earning enough in a standard working week to cover their basic needs with a bit left over for emergencies.

It is still hard to find a success story to point to and say, “There, that’s how you can achieve a living wage. Now let’s all do that…”

Mostly it’s the same few initiatives that we were talking about in 2015 – ACT, Malawi 2020 Tea, and the World Banana Forum. Plus a few individual companies that are trialling unilateral as well as collaborative approaches, H&M’s Fair Living Wage Roadmap, Patagonia’s Fair Trade premium, and Nudie Jeans’ pay your share of the living wage approach. And the jury is still out on how successful they will be in actually bringing lasting living wages to workers. (The one that really seems to be making tangible progress is the worker-driven Fair Food programme of the Coalition of Immokalee Workers which looks like it’s about to significantly increase tomato farm workers’ wages.)

Complex process

Of course, all these initiatives will take time to develop into tangible, sustainable results for workers… it’s a complex process. But there are still so few of them.

So what’s the hold-up?

It’s not for lack of possible approaches to the problem.

We’ve looked for years at different approaches. We have agreed that, while individual companies should find ways of putting their own wages house in order, what is really needed to tackle this systemic problem is collaboration between all the parties involved in the system; government, buying and supplying companies and trade unions. We know that NGO’s can also be helpful as a catalyst for change.

It’s not for lack of a benchmark.

One block used to be the fact that companies felt there was no universally agreed formula for calculating a living wage. Of course, ETI would argue that the formula of collective bargaining is the most effective and appropriate one to establish what workers need to live on, but companies felt a more “objective” measure was called for – if only for triangulation purposes.

Since 2015 the Global Living Wage Coalition has adopted the Anker Methodology and calculated living wage benchmarks for many regions. The methodology and benchmarks have been agreed by the major certification bodies and are becoming widely accepted in other sectors.

So maybe it’s just lack of motivation?

Messing with formulas

Global markets have traditionally been predicated on low wages and high volumes. Brands are wary of messing with that formula as that could impact on returns to shareholders.

But the last word on the 2015 conference’s characterisation of living wages was ‘inevitable’.

Shareholders themselves are starting to ask why workers in global supply chains are living on poverty wages (eg Share Action’s Workforce Disclosure Initiative). Consumers are torn between the need for affordability and a distaste for prices that smack of modern slavery. Graduates are graduating towards companies with stronger ethical identities. And as the rapid labour turnover in factories and farms demonstrates, workers – especially younger workers – are voting with their feet against wages that don’t allow them and their families to survive.

In 2015 we agreed that one of the critical factors in achieving living wages was top level buy-in; the conference report summarised panellists’ views saying: “It takes leadership to make living wage effective; it is essential to get the human rights agenda in front of those at the top – at Board and CEO level.”

Getting leadership to listen

So what will it take to get leadership listening… and then taking the leap of faith to act on living wages, with little concrete examples of success to point to yet?

That was actually the first question we asked at the 2015 conference. Panellists whose companies had taken the leap of faith came up with the following:

• Seeing what living on sub-living wages really means. Seeing and hearing first-hand about the impact that low wages has on employees’ lives can be a critical factor in persuading senior managers to commit.
• Seeing the business benefits. Living wage employers have seen improvements in employee loyalty, increased efficiency, quality and skills retention, reduced turnover (by 1/3), reduced absenteeism, and lower recruitment costs.
• Recognising that unions can be part of the solution. There’s a fear among employers that talking about living wages with unions is just a way of giving them enough rope to hang you with. But unions are the best placed to help move towards a sustainable living wage. One panellist explained how union support helped her to get the right message about living wages across at the top of the Nestlé organisation.
• Being a values-led business. To succeed as a business in the long-term, value needs to be created for the business and for society. Investing in living wages – which is likely to be within the context of a wider raft of ethical trading measures is “Enlightened self-interest”. Businesses not already identifying as “values-led” can start doing so… and would be doing themselves, and everyone they do business with, a favour. (BUT beware of greenwashing! Civil society will see through that.)

The living wage session at ETI’s 20th Anniversary Conference on 1st November will focus on each of these solutions.

It means that any CEO’s present will hopefully go away fired up to start her or his living wage programme – and know where they can get support to make a breakthrough. Meanwhile, CSR people should go away armed with an array of tools, arguments and resources with which to convince their CEOs.

ETI’s 2015 conference examined the barriers preventing companies from adopting living wages. In the intervening years many of these barriers have been removed – such as the lack of an agreed benchmarking methodology and uncertainty over the business benefits. Yet, few companies have joined active living wage initiatives. Led by Evelyn Astor of the ITUC, and featuring Frank Hoffer of ACT,  Linda Ingolfsdottir of H&M, Md Towhidur Rahman from IndustriALL and Oxfam's Rachel Wilshaw, this year’s session, run in conjunction with business solutions provider Elevate, will explore what stops companies from taking the leap and what can help them make progress. Attend the conference