Living Wages: Policy & Risk Analysis

Posted on January 8th, 2020

Living Wages: Policy & Risk Analysis

Living Wages: Policy & Risk Analysis

Once you and your company have decided to research living wages so you can provide sufficient compensation to every person in your supply chain, you may find it beneficial to take the following preparatory steps:

1. Write a Living Wage Policy

You may write a short living wage policy outlining your dedication. The first step is easy, just how writing your goals down can help you achieve them, writing down your wage policy and goals will take you one step closer to paying a living wage.

You can include the policy in your company´s Code of Conduct to suppliers, annual plans, reports and other core documents to make sure everyone in the company is informed and onboard.

In your policy and commitment, you may utilize the definition of a living wage by the Global Living Wage Coalition:

The remuneration received for a standard workweek 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, transportation, clothing, and other essential needs including provisions for unexpected events.

2. Do a Risk Analysis

In a risk analysis, you assess the probability and severity of negative human rights impacts in your supply chains. In other words, you make an analysis of the sector and the country you work in and ask yourself questions such as:

  • Is a living wage an issue in your country/region because wages — generally, or the legal minimum — are too low to live on? Remember, the internet is your ally. Every seller, sector, and country will have different needs, so more research is needed to find information that caters to you. Search the web for recent readings and articles for the most updated info.
  • Have reports come out from NGOs criticizing your sector for paying poverty wages in a certain country? An easy google search can tell you the answer!
  • Have trade unions or workers been protesting for higher wages and better working conditions? If you are unsure, ask your workers or ask to speak to the workers in your factory next time you go for a visit!

In brief, make a quick scan of the local context in which you are working by reading online newspapers, reports from NGOs and UN, and talking to other buyers and to the workers/management in your places of production.

(Source: Paying A Living Wage -a guide for companies, Netherlands Enterprise Agency 2016)

View our other living wage resources here.

In the next letter, we will proceed to assess the actual living wage levels in different countries.

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