A guidance for businesses with suppliers in low-income countries
A report comprised of studies and materials from a variety of actors working in the area of implementing a living wage. The toolkit for living wage presented here has been compiled by Fair Trade Center and has been inspired by the ongoing discussion.
Executive summar by Fair Trade Center, Report by Fair Trade Center, 2015
Many workers in low-income countries dream of wages that are sufficient to support themselves and their families. The situation for workers in countries such as Cambodia, India and Bangladesh are desperate and legal minimum wages, which purchasing companies often refer to, usually lie far below a living wage.
According to the UN’s Guiding Principles on Business and Human Rights, companies are responsible for respecting human rights in their supply chains. Despite this, there are few purchasing companies working progressively with the issue of living wage in their supply chain.
The aim of this report is to demonstrate that the dream of a living wage can be reality. The report presents how companies can contribute to a positive impact in the wage-setting among their suppliers, in part through their own purchasing methods, but also through creating
conditions for increased workers’ participation. In the report, Fair Trade Center (FTC) presents a toolkit with various tools for living wage. FTC also analyzes the work of companies Marks & Spencer (M&S), Switcher and Tchibo for living wages. The selection of companies are based on the Clean Clothes Campaign (CCC)-report Tailored Wages where these companies were among the highest ranked. The companies work with the issue of living wages with their suppliers, using both tools for purchasing and tools for increased workers’ participation. As methods for living wage are under development, FTC sees the work of the selected companies as interesting efforts to approach the issue, not as holistic strategies for living wages.
Purchasing from suppliers in low-income countries is impacted by different factors to achieve living wages. In order for efforts for living wages to have as great an impact as possible, companies need to combine different tools with these factors in mind.
Fair Trade Center recommends companies to:
- Adopt a policy that includes living wage,
- Conduct a risk analysis of wage levels,
- Develop a living wage strategy,
Be transparent in efforts towards living wages.