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17.07.2018

The living wage: towards better industry practices

Published 

17 July, 2018

> 10 minutes
17.07.2018
The living wage: towards better industry practices
Published 

17 July, 2018

> 10 minutes

Abstract


The concept of living wage goes back to the early twentieth century, with the creation of the International Labour Organization (ILO) in 1919. Subsequently, this concept was taken up several times in texts that played a structural role in labour law (Universal Declaration of Human Rights, Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy, and the ILO Declaration on Social Justice for a Fair Globalization).

The living wage also forms an integral part of the concept of decent work, a major goal for the ILO, which placed it at the heart of the new 2030 Agenda for Sustainable Development, adopted in 2015. The living wage is defined as a level of income that allows an individual to meet his basic needs and those of his family (food, housing, education, health, etc.).

Failing to remunerate work with a decent wage is a violation of human rights. That said, the lack of consensus on how to calculate this decent wage prevents the imposition of sanctions. This study enabled us to analyse the key issues related to the payment of a living wage in five sectors (retail, sportswear, technology, agriculture, construction) across 19 listed companies.

Knowledge of the supply chain, compliance with national and international labour standards, membership in industrial initiatives, the implementation of coherent methodologies and policies, were all identified as critical elements in an appropriate living wage strategy.

For each of these criteria, we defined:
• The key indicators used to estimate each company’s exposure to the living wage risk. This risk can be operational, regulatory or reputational, and may have significant financial consequences in the more or less long term.
• The key indicators used to assess the quality of the company’s strategy relating to the implementation of a living wage.

A significant amount of data and information was provided by the stakeholders identified, but transparency and practices vary considerably from one company and one sector to another. These indicators form the basis of the corporate assessment methodology we developed, enabling us to compare practices and highlight the best companies.

This study revealed substantial differences not only in terms of maturity, but also in terms of living wage strategy and methodology across the companies reviewed. For example, companies use different parameters to determine their internal living wage calculation methodology, and for most of them, this is still an ongoing process. In fact, companies often cite the absence of a single definition, and therefore the lack of a common understanding of the term ‘living wage’, as a major impediment to effective implementation.

It appeared that the textile sector is both the one most regularly affected by major controversies and the most mature in its living wage practices.
On the whole, however, the trend is positive, moving towards better practices and greater transparency in all the sectors reviewed, even though, for some companies, there is still considerable scope for improvement.

Finalised on March 2018

 

To find out more, download the full paper


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