The past decade has seen a transformation in Working poverty in supply chains is at odds not only with companies values, Advancing this agenda further requires real commitment. Affordable and Clean Energy There are expanding opportunities for companies to take meaningful action. Answering Living Wage Questions in the B Impact Assessment productivity. There are different living wage benchmark methodologies. Together with partners, IDH designs, co-funds and prototypes new economically viable . Work is the key route to escape poverty. workers and their families to meet basic costs of living.. However, some projects have been a rich source of learning about improving worker-management dialogue, working hours, management, gender impacts of wage disparity and developing more strategic HR management in supplier workplaces. The International Trade Union Confederation (ITUC) is campaigning, together with regional trade union organizations and national trade union centres, for minimum living wages that are grounded in law, based on evidence on the cost of living, and applicable to all workers and sectors. Further, these benefits are amplified when taking an approach to wages Concretely this means removing the downward pressure on wages that may be The Fair Labor Association (FLA) is a multi-stakeholder initiative that holds businesses in the apparel, footwear, and agricultural sectors accountable for upholding human rights and improving working conditions in their supply chains. 2.2.3 Individual and family living wage; 2.2.4 Clan size assumptions; 2.2.6 Optional considerations for choosing benchmarks; 2.2.7 Putting . These returns are increasingly recognized as real by global investors. Consolidating variable elements of pay into the standard, basic wage can be an important means for suppliers to embark on enhancing wages. They are usually expressed as a monetary rate, such as USD per month. For companies with higher gaps, Patagonia will work with the suppliers to implement an overhaul or implement a benefits system that bridges the gap in the short term. Each quarter, WageIndicator presents a updated dataset on Living Wages. > The IDH Benchmark Finder is a tool to help companies select an IDH-certified benchmark, depending on the region/country they would like to cover. Coordinate in engaging decision-makers in sourcing countries and sectors. levels that take into account the needs of workers and their families as well as economic Unilever will ask its suppliers to adopt independent, commonlyrecognized and crediblemethodologies for measuring the living wage gap (in line with the IDH developed set of criteria), where they have been developed and validated by external experts and/or other stakeholders. Zero HungerWages increase the purchasing power of households, IDHs Base Report for Auditors verifying living wage gaps provides a template for information collection and guidance on what to look for in terms of potential cash and non-cash compensation for workers. and those of their employees, but also with the potential to secure resilient supply chains and In sum, benchmarks should be used together with unions and not instead of unions. A key example would be the letter sent by the Fair Labor Association and other multi-stakeholder groups to the Tamil Nadu Wage Commission to press for an ambitious minimum wage revision that reflects the needs of workers in their families, the general level of wages in India, inflation, social security benefits, the relative living standards of other social groups and the relationship between productivity and employment levels. by social dialogue, is core to the achievement of decent and productive work for all. income insufficiency for the satisfaction of basic needs. Many companies with a labour-intensive production supply chain in emerging and developing economies are likely to see living wages as among their most salient risk issues. Living wage benchmarks must be defensible, explicable, and preferably recognizable to suppliers and workers. Reliable living wage estimates within different producing regions are essential to advancing dialogue between sector actors in their respective value chains, including producers, workers organizations, and buyers. Sustainability Relationship Management (SRM) status: H&M Group operates a strategic supplier status programme which preferences suppliers according to performance outcomes in their supplier code of conduct. To this aim, we accept benchmarks that have been recognized by the, IDH Recognition Process For Living Wage Benchmark Methodologies. creating demonstration effect for future engagement with other suppliers). Industry, Innovation and Infrastructure https://fair-wage.com/living-wage-database/. Share your availability for an interview with our research team. Dialogue and coordination with trade unions to support effective Results from the Food and Agriculture Benchmark. Beyond fulfilling a duty of care, ensuring the However, this is not universal and authoritative legal opinions may differ in some jurisdictions (notably the United States). 7 th December, 2022 - Brussels. A key lesson from existing initiatives is that the actions of individual companies can achieve greater impact if combined across an entire industry or value chain. Therefore, companies will not be required to purchase benchmark data. attention to the issue, there is a need to safeguard both intangible and tangible brand assets. The Roadmap set up by the H&M Group has been independently reviewed by external experts in 2020. The new approach will be based on the independent evaluation of the outcomes achieved in the past years, external stakeholders inputs and on the long-lasting experience working with suppliers in many countries, among which include China, Bangladesh, India and Indonesia. Find a Living Wage Benchmark in your region of interest. Platforms like the UN Global Compact Decent Work in Global Supply Chains Action Platform are designed to facilitate this type of cross-sectoral collaboration. There is no universally agreed definition of a living wage as a concept Its mission is to engage in and disseminate high quality research, analysis, and training related to living wage and living income (based on the Anker methodology). Ensure consistency in the following ways: Pay period:if for example wages are paid weekly, then multiply by 52 and divide by twelve to obtain the monthly figure. In addition, to support the shift towards a living wage, Fairtrades Revised Standard provides that up to 30% of the Fairtrade premium must be paid out as a cash bonus to hired workers. IDH has developed a process to recognize robust living wage benchmark methodologies that are available in the market. The Workstream is centred on the B4IG Roadmap for an inclusive recovery. and IDH (the Sustainable Trade Initiative). 7) together make clear the inextricable link between employment and an adequate standard of Unilateral improvements to purchasing practices are necessary but may not be enough. Achieving living wages in supply chains is part of all businesses responsibility to respect fundamental humanrights, Addressing poverty wages in supply chains is key to accelerating the achievement of a wide range of Sustainable Development Goals to which businesses arecommitted, Achieving living wages in global supply Chains aligns with core business drivers for both buyers andsuppliers, Living wages are being recognized by a growing number of businesses as forming part of their corevalues. straightforward, namely: do the prices my business pays to a supplier make it impossible for income allocated to wages) has been in decline for three decades. excessive overtime or hold down a second job. a living wage, covering their basic needs and those of their dependents, calculated in line resulting in reduced recruitment, and developing a more stable and skilled workforce. The coordination platforms and initiatives required to address supply chains wages are a leading example of new PDF Indicators of Sustainable Development: l Guidelines and Methodologies Other: This is, This op-ed first appeared in Procurement Magazine. key to progressive reductions in inequality within and between countries. An example might be prioritizing work with suppliers in countries where wage improvements are already part of the national conversation and where brand intervention can lend credibility to wider efforts to transform labour market institutions. Include only the cost to the employer and not the retail value. Sorry we couldn't be helpful. This includes payment of fair wages. Everyone who directly provides goods and services to Unilever will earn at least a living wage or a living income by 2030. Wage income is pivotal to the achievement of many other sustainability Social compliance assurance and engagement activities can be used to promote social dialogue at the supplier workplace level. They continually strive to expand the number of countries and locations for . Earning a living wage means workers receive sufficient wages to afford a decent standard of living for the worker and their families. Recognizes new living wage benchmarks so that more B Corps and more workers can benefit from a living wage. A commitment to ensuring that direct employees receive a Improved purchasing power through enhanced wages enables workers and their families to ensure access to adequate IDH Roadmap on Living Wages. Agreement between global buyers and retailers and trade unions to transform the garment, textile and footwear industry and achieve living wages for workers through collective bargaining at industry level linked to purchasing practices (ACT). sustainable development. It is important to properly document and collect verifiable information in relation to efforts to pay living wages. With the IDH Roadmap on Living Wages, we aim to bring consensus and alignment around definitions, tools, and approaches for companies to work on #livingwages in a uniformed way. Collaborative solutions are required to aggregate buying power, to remove blockers Lighter touch suppliers would involve technical support on payment processes and supporting small adjustments to HR management systems. Multi-stakeholder platforms to support and guide towards living wageimplementation, Tools and resources for living wagebenchmarking, Collaborative platforms to drive change at the value chain and sectorallevel, The importance of social dialogue and sound industrialrelations, The importance of coordination andcollaboration. policies are To answer the questions, companies must calculate if they are paying their workers a living wage. Many companies with a labour-intensive production supply chain in emerging and developing economies are likely to see living wages as among their most salient risk issues. Reduced InequalitiesNational wage, industrial relations and social protection policies are Patagonia has selected the Martha and Richard Anker Living Wage Methodology as the living wage value to target as a goal within its countries of operation. Code of Conduct. Ideally a collectively-bargained wage represents a living wage, but in practice this does not always happen. This is usually around 40 hours per week. Beyond the two operational questions in the Worker impact area focusing on living wages, there are several other questions that refer to living wages in the B Impact Assessment. Each one has its own approach for calculating the living wage. by social dialogue, is core to the achievement of decent and productive work for all. COLLECTING DATA Data on cost of living is collected through country/ region -based surveys (online and face-to-face). Buyers will in many cases need to be prepared to pay more. These are specified below in table 3, see right-hand columnLimitations to what B Lab accepts. Efforts on both fronts, ensuring a living wage for your own workforce Therefore, CBAs will currently not be accepted as living wage benchmarks. Zero HungerWages increase the purchasing power of households, One of its main aims is to foster constructive dialogue with employers and workers at factory and sectoral level with a view to planting the foundations for sector-wide bargaining on wages and, in consequence with the promotion of social dialogue and the respect of the right of freedom of association. Sustainability teams will need a strong mandate from company leadership to engage internal stakeholders and buyers to drive the agenda internally. Finally, IDH also has issued a publication that provides an overview of the five main actions that buying companies should consider, including: adopting better procurement and trading practices, embracing transparency, co-investing and implementing practical solutions, supporting social dialogue, and sector-wide collaboration. This is the approach adopted by Richard Anker and Martha Anker in their work Living Wages Around the World Manual for Measurement, and is the basis of the approach deployed by the Global Living Wage Coalition It is crucial to closely engage and work with procurement colleagues to understand their views and concerns in relation to how purchasing practices can affect sustainability outcomes such as wage levels and working hours, and also to share knowledge on how purchasing decisions can affect outcomes for workers in supply chains. This entails using the adjusted FR (fertility rate) and IE (income earners) figure. As the determinants of low wages may be systemic or structural in nature, interventions to improve wages should aim to address low pay holistically and seek to link up potential areas for collaborative progress at all three levels: the global, the national and the (supplier) enterprise. Investing in workforce skills development can sustain a virtuous cycle of enhanced productivity leading to returns which can sustain higher wages. What are the key lessons learned from experience todate? Decent wages can drive inclusive and sustainable industrialization and raise industrys share of employment and Living Wage Database - Fair - FairWage Extract and record the lessons from early engagements, particularly where they have resulted in shifts in workforce retention, engagement and motivation leading to quality and productivity outcomes that have supported a suppliers business fundamentals. Help us improve this article with your feedback. Upgrade your browser to improve your experience. ALIGN is a guidance tool for agri-food companies aiming to reduce complexity around the topic of living wage and living income drawing on the leading methods and successes developed by experts on improving wages. circular debate, and proceed to concrete action. and efforts to achieve a living wage for all workers in your supply chain, can go hand-in-hand. commitments: this is about demonstrating real action on a pressing agenda. Use typical family figure for the living wage for family question. There are similar, but distinct, business rationales for buyers and Use typical family figure for the living wage for family question. This commitment is reflected in the companys Code of Conduct and its Workers Help us build a better website! This view is reflected in the Fair Wage Network (FWN) approach which emphasises 12 dimensions of fair wages. PDF B4IG Work Cycle on Living Wage means of achieving decent work through reduced inequities, increased productivity and from improvements to wages for lowest-paid earners in the workforce, and there can be The Sustainable Trade Initiative IDH -that works in multiple countries and sectors with over 600 companies- has put in place an interesting initiative to promote the payment of a living wage worldwide. Increasingly, credible information is publicly available on wages which would enable Define an approach to equitable cost-sharing be prepared to pay more to achieve results. This report is not a blueprint for living wages in global supply chains. The overarching balance to be struck in implementation is between (enhancing) supplier efficiency and labour management practices and (modifying) buyers purchasing practices. Decent Work and Economic GrowthA decent wage, determined through This means there is space for new platforms of advocacy directed at changing the conversation around labour costs at the level of national industries and labour markets. Include only the cost to the employer and not the retail value. 2. Theseare: Paying wages that sustain minimum acceptable living standards, Pay (and benefits) systems at workplace level, Real wages (relative to inflation, changes in cost of living), Wage share (workers share in profit growth), Work intensity, technology and up-skilling. !kYE (Y it=s}YUo}#||J}z?o~ou=oOZ[hWzI=ao;g0|
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As of March 2022, IDH has recognized five benchmark methodologies, so only those are included. Are my procurement colleagues aware suppliers in lowest-wage regions, or suppliers who are best positioned to achieve a living wage, This degree of cooperation and information sharing can only be developed over time. Photo: UNDP/Freya Morales, City of Bulawayo employees cleaning up 5th Avenue, which until recently, was designated for vegetable and fruit vendors. It is key here is to understand what the pathways of change look like: while structural changes are likely to imply a long-line, intermediate outcomes should be identified which are consistent with and do not impede longer-term aims, such as fostering forms of worker-management dialogue which can lay the ground for more substantive negotiation in the longer-term. Output improvements in productivity and 1. million women. Unit pricing can exercise an important downward pressure on wages (and non-wage labour costs), and alleviating these pressures needs to be a central part of any approach aiming to improve wages for supply chain workers. The new Reference Value methodology, launched in 2020, affords an opportunity to rapidly scale up the initiative, producing living wage benchmarks which are not location-specific using a desk-based quantitative methodology. behind the agenda to improve wages in supply chains and are an important foundation to build on. In terms of possible actions and activities at each of these levels, this means: Internal and Peer-to-peer Engagement on Purchasing Practices, Free on Board (FoB) Price and Supply ChainOptimisation, Brand integration of commercial and sustainability functions, Collaboration & shared objectives with other buyers, Adjustments to purchasing practices & sourcing strategies, Price (FOB) MNCs need to understand labour component of unit cost and be prepared to pay more, Engagement with National/Sectoral Actors on Minimum Wage, Industrial Relations Framework and SocialProtection, Supporting effective labour market governance, including social dialogue and bargaining, Exercising positive influence over minimum wage setting processes and outcomes, Engagement and building trust with suppliers at sector/supplier industry level, improving sourcing dialogue, Involvement of local workers advocates and representatives, Brand commitments to neutralise competitiveness concerns over raising wages, Engagement with Suppliers on Pay/Hours Management Systems, Labour Costing, Productivity and Quality, and Dialogue and WorkerVoice, Professionalization of labour/HR management, including pay systems, Capacity building on accurate labour costing & forecasting labour needs, Promotion of workplace-level social dialogue, Enhancing process and production efficiency, Support on calculating and paying improved wages. Gender EqualityMany of the lowest-paid people are women; ensuring these women The prevailing wage includes all wage components. The FWN is also involved in a project with LOral on the possible extension of the living wage concept to the living income concept, that would more closely match the basic needs of workers under atypical forms of work contracts such as part-time, self-employment, daily work, informal work arrangements etc. Some benchmarks offer their data in multiple formats, where only some are accepted by B Lab. Human Development Index: Methodology and Measurement. There are two sides to this calculation: what should workers be paid (benchmark) and what are workers paid (prevailing wage)? Schneider Electrics leadership delivered a company-wide mandate to integrate the companys Decent Work commitments (which include payment of fair wages) into its core business strategy. Principle 3 states that: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining., Enabling the achievement of a livingwage. 3. phenomenon of working poverty. Upgrade your browser to improve your experience. Fair Wear Foundation. While ensuring payment of living wages in supply chains is often seen as a Asymmetries of power in global supply chains and information mean that, in reality, some actors are functionally dependent on others. Management School, Rainforest Alliance published their updated standard, their approach to implementing living wages, Fairtrade International announced a new base wage for banana workers, Reference Value methodology, launched in 2020, Living Wages Around the World Manual for Measurement, Base Report for Auditors verifying living wage gaps, ACT (Action, Collaboration, Transformation), ACT Global Purchasing Practices Commitments, new indicators and methodologies for wage setting, Decent Work in Global Supply Chains Action Platform, living income for farmers may be the most salient risk, Decent Work Toolkit for Sustainable Procurement, Action Platform on Decent Work in Global Supply Chains, letter sent by the Fair Labor Association and other multi-stakeholder groups to the Tamil Nadu Wage Commission. Decent Work and Economic GrowthA decent wage, determined through mechanisms underpinned clean water and sanitation. Unilever has pledged to specifically focus on the most vulnerable workers in manufacturing and agriculture (working with stakeholders toward creating systemic solutions to raising living standards through purchasing practices, collaboration and advocacy wherever [they] operate). Alongside the guidance in 2.2.2, companies may take the following into consideration when choosing benchmarks: Use location-specific benchmarks (or as precise location as possible), Nearest location to where workers are located, Most comparable location to where workers are located (e.g. %PDF-1.4 Reinforcing brand commitments to long term sourcing from an industry can support trust building and good faith amongst partners in the industry. These fair compensation blueprints must be data driven and include engagement with workers, union representatives and civil society. 2020 Fair Compensation Strategy, which requires each FLA member company to develop an actionable blueprint for improving wages in their own supply chain. This Answering the living wage questions in the B Impact Assessment 2.1 Accepted living wage accreditations 2.2 Using living wage benchmarks 2.2.1 What is a benchmark? The FWN thresholds on the living wage have been recognized by IDH at the beginning of 2021, as highlighted by its Living Wage Identifier: https://www.idhsustainabletrade.com/idh-living-wage-identifier/. Usually, calculations are based on gross wages per month. focus on the reality of working poverty has seen a range of companies move beyond previous, Benchmark Methodologies The recognition process of IDH is based on the nine criteria. Fair Wears tools simplify some off these dynamics by encouraging companies to understand their inputs into value chains and to be pragmatic about overcoming challenges. The key objective to compare like-with-like (monthly to monthly, gross to gross, and using the same underlying assumptions about working hours. A key lesson from existing initiatives is that the actions of individual companies can achieve greater impact if combined across an entire industry or value chain.