Steps towards a living wage in global supply chains

KEY POINTS

Rachel Wilshaw/Bryony Timms January 2015

HUMAN RIGHTS INEQUALITY AND THE LIVING WAGE

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LIVING WAGE AND THE UN GUIDING PRINCIPLES ON BUSINESS AND HUMAN RIGHTS

• A living wage does more than keep people out of poverty. It allows them to participate in social and cultural life and afford a basic lifestyle considered acceptable by society at its current level of development. It is a human right.

• When a profitable company does not ensure a living wage is paid, it is pushing onto the most vulnerable people in its supply chain the negative impact of its business model.

‘Business needs to demonstrate it contributes to the common good. The living wage is one of the most powerful tools for business to contribute to their workers’ human rights’

Phil Bloomer, ED Business and Human Rights Resource Centre

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EVEN IT UP: Time to End Extreme InequalityOxfam report, 2014

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IN-WORK POVERTY – OXFAM’S EVIDENCE BASE

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WORK SPECTRUM

UNSUSTAINABLE SUSTAINABLE

ILLEGAL ROAD

Does harm

LOW ROAD

In-work poverty

MEDIUM ROAD

Does some good

HIGH ROAD

Does good

Forced labour, denying workers their human rights and freedom and children their education.

Subsistence only.Work on legal-but-low wages, excessive hours, often insecure. No worker voice.

Wages above legal minima, secure contracts. Workers’ committee.

Secure work on a living wage, based on a collective bargaining agreement.

Forced labour in the Thai seafood industry.

Unrest and poor nutrition in Cambodia garments

Slowly improving work in a Kenyan packhouse.

Wellbeing at living wage employer Alta Gracia, in the Dominican Republic.

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WHAT IS DRIVING LOW WAGES?

The wages of garment workers have fallen in real terms over the period UK executive pay has doubled.

Fast food workers get $8.90 an hour in the US but $20 in Denmark, due to a sector Collective Bargaining Agreement.

Minimum wages are held down by governments to keep companies sourcing and investing there.

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MISMATCH BETWEEN PRICES PAID FOR BANANAS AND COST OF LIVING IN PRODUCING COUNTRIES

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MINIMUM WAGES AND ESTIMATES OF A LIVING WAGES IN 3 SECTORS

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WAGE BENCHMARKS FOR THE KENYAN FLOWER SECTOR

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FORCES ON COMPANIES TO ACT ON LOW WAGES AND FORCES HOLDING THEM BACK

STEPS IN THE RIGHT DIRECTION, AND INVESTING IN DEEPER CHANGE

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STEPS IN THE RIGHT DIRECTION

• Productivity enhancements used to raise low wages.

• Retailer-initiated wage funds.

• Changes in corporate policy and/or public commitments.

• Brand collaboration involving a trade union.

• Welcome, but as yet little has changed for very few workers.

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WHAT IS NEEDED FOR DEEPER CHANGE?

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ORGANISATIONS DRIVING DEEPER CHANGE

Enabling factors:• Campaigning and public debate.

• Published research linking low wages to poverty.

• Collaboration across a sector eg bananas, tea, garments.

• Engagement by companies with international unions.

• Agreed wage benchmarks.

• Case studies and statistics on business benefits.

• Third party accreditation.

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RECOMMENDATIONS

1. Look inwards • Get your own house in order with your own employees.• Publish a commitment, develop a plan. Report progress and challenges.

2. Look at sourcing strategy and supply chain management• Start with suppliers where there is a high risk of low wages and you have

commercial leverage. • What would make suppliers feel secure in raising wages, and remove

barriers to collective bargaining? Longer contracts? Fewer audits?

3. Look outwards• Who can you collaborate with to understand wage gaps? • What can you do to influence governments?