steps towards a living wage in global supply chains
TRANSCRIPT
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Steps towards a living wage in
global supply chains
KEY POINTS
Rachel Wilshaw/Bryony Timms January 2015
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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?
1
Unfair share
of value
in chain
2
Absence of
collective
bargaining
3
Inadequate
minimum
wage
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 SECTORSM
inim
um
wa
ge
s a
s a
perc
en
tag
e o
f
estim
ate
d liv
ing
wag
es (
mo
nth
ly)
0
20
40
60
80
100
72.9
40.2 36.5
Malawi Tea
Sector
South Africa
Grape Sector
Dominican Republic
Banana Sector
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WAGE BENCHMARKS FOR THE KENYAN FLOWER
SECTOR
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Lack of capacity for social dialogue
between employers and trade unions.
Short-termism of the shareholder
investor model.
Reputational risk from exposes and a
growing movement for a living wage
Expectations of stakeholders including
employees, customers and society.
Expectations of governments e,g,
‘non-financial’ reporting on human rights
risks, procurement policy.
Correlation between fair treatment and
better quality and productivity.
A resilient supply chain low in material,
water and energy use needs multi-skilled,
adaptable motivated workers.
Growing attention paid to human rights
risks by SRI fund managers.
Workers who earn more can buy more,
stimulating the economy.
Complex, fragmented, opaque
supply chains.
Lack of enforcement of labour law
and redress for violations.
Compliance auditing. Lack of living wage
benchmarks, tools and advice.
Competition law which protects
consumers from high prices but not
workers from low ones.
FORCES ON COMPANIES TO ACT ON LOW WAGES
AND FORCES HOLDING THEM BACK
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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?
Fairer share
of value
in chain
+ Commitment, Transparency and Collaboration
Collective
bargaining
Minimum
wage = a
living wage
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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?