Fresh Thinking is Needed to Guarantee “Living Wage”

GDJASUJAMillions of workers across the globe are deprived from the minimum wage required to live a decent life. For them, the Living Wage, a voluntary pay rate set above the statutory minimum wage, is still but a distant dream. Many employers who do not pay the Living Wage argue that they simply cannot afford to. According to them, a minimum wage destroys jobs, particularly for the young. Is their argument about greed – the quest for maximum profit from the bodies and labor of others? We are NOT talking about vulnerable persons who fall victim to traffickers, from desperation, deception, or coercion.

Even in the developed economies, the wage growth has been slow since the 2008 banking collapse causing millions of workers struggling to make ends meet. It is a matter of common sense that in view of the overall rising prices of items of basic needs like rents, petrol prices and electricity bills, wages also need to increase accordingly to at least maintain the status quo. It is also an irony that the ‘minimum wages’ fixed by governments in many countries fall far short of what many organisations estimate to be a ‘living wage’. Unfortunately, the reality is that the vast majority of the people in emerging economies like India, China, Bangladesh and others struggle to survive on wages that are barely enough to cover their daily subsistence needs.

In the name of the Corporate Social Responsibility (CSR), a large number of global retailers and brands have committed themselves to help these deprived and exploited class of workers who work in factories from where they source their products. They are applying pressure on these factories owners, through various means, to pay their workers their statutory entitlements which include the prevailing minimum wage plus any pension contributions, sickness or holiday pay they are entitled to in addition to providing clean, healthy and safe working environment. But in absence of proper monitoring mechanism, the progress made is not commensurate with the resources allocated or committed for this purpose by the implementing agencies.

Also, there are now instances of abuse of funds that are supposed to be spent for the CSR related activities. The retailers and brands are spending huge amounts of funds on creating awareness by sensitizing consumers who are ‘liberal minded’ and sensitive to the plight of poor workers around the world. The result is that these consumers are willing and ready to spend 20-25% extra for the products made in factories where decent working conditions and wages are ensured. They rely on the information provided/advertised by the retailers and brands for making their decision in this respect. However, hundreds of NGOs have come up in the last couple of years who claim to be monitoring the working conditions of workers across the globe and also the activities of retailers and brands with respect to their CSR commitments. There is a constant flow of information from these Not-For-Profit Organizations, sometimes widely varying and even conflicting. The retailers and brands have their own dedicated well-staffed, and liberally funded, division to publicize their own CSR efforts among the community and their targeted consumers. The result of all these efforts at different levels is that workers in countries like South Africa, Bangladesh, India and Cambodia are now seeing their voice heard in demanding better wages and working conditions.

I tend to agree with Prof. Bain, the chief architect of minimum wage in the UK, who said recently: “In the early years of the minimum wage, we were successful in tackling some of the worst excesses of low pay and exploitation. This was our number one priority. The challenge for the next 15 years is much harder – how to help people earning above the minimum wage but below the living wage. Yet on current forecasts it looks like the gap between the minimum wage and the living wage could only widen in the coming years. Fresh thinking is going to be needed.”

Managing Editor

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