Closing the living wage gap offers a path out of poverty for workers and their families, and there is no stronger reason for doing so than that. But there are also multiple co-benefits to businesses that succeed in implementing a living wage, not only with respect to supporting the SDGs and to promote human rights, but in practical business terms too. For example:
It’s a sad fact, but poverty increases the rate of illness due to malnutrition and unhealthy living conditions, leading to higher rates of absenteeism and reduced productivity. Healthy workers, by contrast, are more likely to turn up for work and have more energy, resulting in greater productivity and improved profits.
Businesses that pay living wages are also more likely to attract better quality employees and instill greater loyalty from their workforce, resulting in improved employee relations.
With the ever-growing demand for ethically sourced produce from consumers, buyers and retailers are increasingly looking for responsible employers to be their suppliers. Retailers that can show that they care about the poorest people in their supply chain stand to win the trust — and custom — of consumers.
It’s reasonable to assume that, given the strong business case for implementing a living wage, suppliers and other industry stakeholders would be doing everything within their power to try to make paying them the norm. And there are certainly instances of this happening. The Malawi 2020 Tea Revitalisation Programme, for example, was set up in 2015 by a coalition of industry stakeholders – including Taylors – specifically to address low pay and improve farmer livelihoods.
In Costa Rica and Belize, the Rainforest Alliance has teamed up with Fyffes, IDH and other private entities to understand living wage gaps in the banana industry and develop plans for improving worker compensation. In Tamil Nadu, India, the Living Wage Multi-Stakeholder Initiative has been working to foster collaborative conversations on practical steps to achieve a living wage for the garment-manufacturing city of Tiruppur. And in Ghana and the Ivory Coast, Tony’s Chocolonely has been improving living standards for thousands of cocoa farmers and their families by paying them a premium in addition to the Fairtrade premium they receive for their cocoa, and which is necessary to ensure a living income.
But despite some success stories, the reality is that putting a living wage in place has proven to be a highly complicated process with a significant number of unintended economic and social consequences that need to be considered. Some incremental and localised changes have been achieved, but very little of the sector-wide change that is required. Through the Malawi 2020 project, for example, 33% of the living wage gap has been successfully closed, but it is still some way short of the 100% target. This is certainly not to say it has not had its successes, but it does demonstrate the scale of the challenge even on projects that have the full co-operation of multiple stakeholders.