Who’s responsible for paying living wages?

Workers all over the world who make the things that we eat, wear and use are often paid so little that they have to work exhaustingly long hours, have several jobs, put their children to work or get into debt that they can never be free of. When people learn this, the cry goes up,  “Big brands should pay wages workers can live on!”

Brands are big, highly visible and, we presume, earn large profits from their trade. But are they really responsible for the payment of living wages? Well, yes, they do have some responsibility - they could share their profits a bit more fairly with workers for example – but they don’t have all the responsibility.  The simple fact is, they are not the ones paying the workers their wages. Any more than we, as customers of the brand, are paying their wages.

Brands are part of a long and often very convoluted supply chain, with many layers of sub-contractors. So even if brands were willing to take a cut in their profits (and if us consumers were willing to pay a bit more for our purchases), can they be sure the extra would get to the workers? Probably not, but there are a number of things they can do. They can use their powerful positions to put pressure on supplier companies to ensure workers can join unions, and to respond positively when unions negotiate for higher wages. They can help those companies improve their HR and pay systems and make the production process more efficient.

There are many other players in the complex game of international supply chains, who also share the responsibility for making living wages more possible. John Ruggie, author of the UN’s ‘Guiding Principles on Business and Human Rights’, states that while companies have a responsibility to respect human rights (and not to do anything to undermine them), governments have a responsibility to protect human rights. So, governments have a responsibility to set national minimum wages that are sufficient for workers and their families to live on, (consulting with workers’ representatives to decide what those wages should be) and they need to enforce that legal requirement. A group of companies, many of them ETI members, recently wrote to the Cambodian government urging them to raise the minimum wage and committing to paying higher prices if necessary – a great example of companies taking their share of responsibility for better wages.

The Guiding Principles also say that business and government together are responsible for ensuring that when human rights are breached, workers can get redress. So brands, and the companies that they buy from, must work together to ensure that workers have genuine representatives who can negotiate on their behalf and fight for them when they are paid too little – or not at all. They can also help to make sure that workers know that they have the right to be paid at a certain level, to be paid regularly, on time and without unexplained deductions being made.

One of the Ethical Trading Initiative’s nine Base Code clauses is that living wages are paid. In other words, the companies, NGOs and trade unions that have become ETI members have made a commitment to work together towards the goal of living wages being paid for all workers in the supply chains that begin in India, China, Ethiopia, Dominican Republic... all over the world.. and end in our shops.

We have recently reiterated to our members what we expect from them in relation to living wages. We don’t expect them to be paying living wages to all their employers and for all their suppliers to be paying living wages tomorrow (we’d love that to happen, of course, but it’s just not practical). But we do expect them to be making plans in that direction. That means taking practical steps to make it easier – and more compelling - for those that employ workers in their supply chains to pay living wages.

ETI very much welcomes the new living wage briefing paper from Oxfam, who is not just a member of ETI, but a founder member. The paper provides a practical step by step guide to how brands can take their share of responsibility in working towards living wages for workers all over the world.