Living Wage

Work to mainstream a groundbreaking methodology to advance the payment of the living wage

SAI's shared vision is for workers to achieve wages at a level that will help them escape poverty. The concept of a living wage is central to the SA8000 Standard, and in fact, SA8000 was the first standard to integrate the concept. Issues with the living wage are well known:

1.      lack of a globally accepted definition hinders mainstream adoption;

2.      lack of transparent data on calculations of living wages accessible by stakeholders willing to work toward implementation of a living wage also halts uptake;

3.      stakeholders have so far hardly been able to create sufficient insights in the differences and complementarity between living wages and national minimum wages and collective bargained wages.

SAI is currently working to address these issues as a member of the Global Living Wage Coalition, partnering with Dr. Richard Anker (former Senior Economist at the International Labour Organisation) and Martha Anker (former Senior Statistician at the World Health Organisation), Fairtrade International, Forest Stewardship Council (FSC), GoodWeave, ISEAL AllianceSustainable Agriculture Network/Rainforest Alliance (SAN/RA), and UTZ Certified. The goal is to work on the methodology, promotion and implementation of a living wage for the workers that are protected by our respective labor standards. The long term goal and shared mission of our organizations is to see improvements in workers' conditions, including wage levels, in the farms, factories and supply chains participating in our respective certification systems and beyond.

Long Term Vision

We see the living wage definition and development of the methodology for calculation as first steps of a long-term process. This process will include the development of an open source database to host living wage benchmarks for wider usage and also capacity building efforts, which will allow others to replicate our work.

We share the view that these living wage benchmarks will not supplant collective bargaining rights, but serve as a replicable tool to support social dialogue between workers and employers. For many developing country producers, wages form an important part of the costs of production. As such, it is important to introduce wage requirements in our standards only in combination with dialogue and involvement of actors at all levels of the supply chain. Wage issues are issues of fairness in the distribution of gains accrued across the value chain in the process of trade.

Including a definition and methodology for calculating living wage in our certification standards is only a first but necessary step towards achieving wages at a level that will help workers escape poverty and is instrumental to collaborative efforts of retailers, buyers, producers and trade unions to make a living wage a reality. Our organizations are firmly committed to this process.

What do we commit to?

We commit to adopt a common definition of living wage and to apply a common methodology for estimating living wage levels and for evaluating wages and other forms of remuneration against those levels.

We commit to using a wide range of strategies to work towards the long term goal of improving wages.

We commit to seeking support from brands, buyers, and retailers to make wage growth at the primary production level possible.

We commit to working together and working with the relevant stakeholders in these processes.

Why focus on Living Wage?

The concept of a living wage has been around for many centuries. Adam Smith wrote about it in the 18th century, and it is referred to in the Constitution of the International Labour Organization (ILO) of 1919. The United Nations Universal Declaration of Human Rights (1948), the Council of Europe’s European Social Charter (1961) and the UN International Covenant on Economic and Social Cultural Rights (1966) all recognize the need for workers to receive a (decent) living wage. Hence, a living wage is considered a fundamental human right.

Reports by civil society organizations, including Oxfam, have highlighted the issue of low wages and excessive working hours in the supply chains of a range of commodities and manufactured items. While statutory minimum wages are established in ninety per cent of countries, in many cases wages paid to workers fail to comply with these. Where there is compliance, minimum wages do not often permit a decent standard of living for workers and their families.

At present, attention to the topic of a Living Wage is growing due to declining wage shares worldwide, widening wage and income inequalities and growing interest in corporate social responsibility. As a standard-setting organization, we, along with our other standards partners, are responding to this call to examine how we can most effectively address wage levels through our standards and other operations and through collaborative work with our wide stakeholder networks.

What is a Living Wage?

In order to work together on living wage, it is important for us share an understanding of what a living wage is. A recent ILO review revealed that there is a general consensus on the definition of living wage (R. Anker, Estimating a Living Wage: A Methodological Review, ILO 2011). Drawing on this report and in consultation with experts, we have adopted the following common definition for living wage. A living wage is:

The remuneration received for a standard work week by a worker in a particular place sufficient to afford a decent standard of living for the worker and her or his family. Elements of a decent standard of living include food, water, housing, education, health care, transport, clothing, and other essential needs including provision for unexpected events.

Towards a Common Methodology

With Dr. Richard Anker, we aim to design and test a common methodology to estimate living wage levels for the areas in which we work. The methodology draws on lessons from pilot projects in various countries. In a nutshell, the living wage is estimated by adding up: the cost of a low cost nutritious diet that is appropriate for food preferences and development level of a country, plus the cost of decent housing in the area, plus other costs for essential needs, which are assessed through a method of extrapolation. A small margin above the total cost is then added to help provide for unforeseen events such as illnesses and accidents to help ensure that these events do not easily throw workers into poverty. This total per capita cost is scaled up to arrive at the cost of a decent standard of living for a typical family and then defrayed over a typical number of full-time equivalent workers per household.

We at SAI intend to make any Living Wage estimates we participate in fully available to the public.

Current Work with Corporate Partners

SAI is currently working with a global brand on a rigorous research process to help the brand to assess and benchmark the wages and benefits in its supply chain. The research includes field validation, worker interviews and stakeholder engagement. This work is being aligned with the methodology mentioned above and is part of an ongoing process to assist companies in understanding and achieving the living wage.
 
Living Wage Reports
 
The following are living wage reports written by Dr. Richard Anker and Martha Anker. SAI is proud to publish these reports that explain the Anker’s methodology for calculating the living wage.
  • May 2013: South Africa

    • Please find the full Report here.

  • January 2014: Malawi

    • Please find the Executive Summary here and the full Report here.

  • March 2014: Kenya

    • Please find the Executive Summary here and the full report here.

  • May 2014Dominican Republic

    • Please find the English version of the Executive Summary here and the full Report here.

    • Please find the Spanish versions of the Executive Summary here and the full Report here.

Living Wage: Making it a Reality

SAI has designed the webinar, “Living Wage: Making it a Reality,” to teach interested individuals about the living wage and the methodology. After taking this webinar and the interactive quizzes, participants will be familiar with the concept of the living wage and understand the need for and implications of it. They will also understand the methodology and how it is used in the field. Finally, by listening to different stakeholders’ voices, participants will be able to understand how the living wage is relevant to them and explain their own role in supporting and implementing the living wage.

For more information about the webinar, click here
If you would like to enroll in the webinar, click here for instructions.

 

For more information, contact Rohini Barreto, Director, Strategic Programs at RBarreto@sa-intl.org