A Remarkable Story of Global Progress

By Duncan Green, Strategic Adviser, Oxfam GB

A Remarkable Story of Global Progress

A few years ago, I was struck by the fervour with which a student activist acquaintance of mine, Stefan Baskerville, talked about the Living Wage. Every holiday he Livingwagewould leave his life of student activism (and occasional study) in Oxford and head for the East End of London, where he worked for Citizens UK, a community organization, in a campaign to get the LW for the cleaners and other low-paid employees in the City (London’s financial district). Years on, he’s still at it, and his efforts and those of thousands of other activists are starting to bear fruit, both in the UK and the developing world.

Last month Oxfam published a report on ‘Steps towards a Living Wage in Global Supply Chains’, which provides an intriguing account of progress to date. The Living Wage is not a new idea – in 1919 the ILO argued that ‘Peace and harmony in the world requires an adequate living wage’. But until recently, the action was all elsewhere – freedom of association, collective bargaining, child labour, health and safety, payment of the minimum wage set by government, but not based on what a family needs to live decently (the distinction with the LW).

But in the last few years, the living wage concept has started to get traction:

The grassroots-based Asia Floor Wage campaign took the debate up a level, when a group of Asian unions and NGOs proposed a formula for the LW and published benchmarks for Asian countries covering 80% of global garment production. Western campaigners got behind them.

Multi-stakeholder initiative Fairwear Foundation nudged its corporate members to go ‘beyond audit’ and to remove barriers to a living wage. It has developed Wage Ladders (which include benchmarks from local trade unions) which help members set improvement targets, and instituted a Performance Benchmarking System which rewards action and penalizes inaction.

Early steps in the right direction were taken by Inditex, which signed an International Framework Agreement with the garment union in 2007 (re-affirmed in 2014) and Marks & Spencer which included in its 2010 corporate plan a commitment to pay a price that enabled a ‘fair living wage’ to be paid in Bangladesh, India and Sri Lanka.

Impactt’s Benefits for Business and Workers programme set out with eight brands and 73 factories supplying them to develop a virtuous circle of improvements, proving a business case for paying better wages in terms of improved productivity and staff retention.

In the food sector, Unilever replaced its traditional supplier code with a Responsible Sourcing Policy based on a continuous improvement framework covering mandatory requirements, good practice and best practice standards. It has published targets for 200 ‘Partner to Win’ suppliers and 1,000 strategic partners (11,200 sites in all) to achieve ‘good practice’ standards by 2017; these include a ‘living wage approach to fair compensation’.

Nestlé became the first major food manufacturer in the UK to become an accredited Living Wage employer in 2014.

In November 2014, Tesco became the first retailer to announce that it would pay a living wage to banana workers in key sourcing sites by 2017.

In September 2014 following months of unrest eight brands wrote an open letter to the Cambodian government and industry association stating their readiness to factor higher wages into their pricing. In November the government raised the minimum wage by 28%.

As for the UK, for Stefan and his fellow campaigners at the Living Wage Foundation have made remarkable progress: In 2011 only two of the top 100 UK companies were living wage employers; now there are 19, with 10 more in the pipeline and over 1000 accredited employers in total, including Oxfam GB. While the numbers benefitting are still relatively small – 60,000 against over five million paid below the living wage – the initiative has helped normalize discussions in the business community and in the UK provides a ‘bridgehead of principle’ to action in global supply chains.

How did this change come about? The briefing identifies several factors:

The steady global decline of wages as a percentage of GDP has created a general sense that the system is both unfair and increasingly unstable. A passionate and sustained grassroots campaign by unions and grassroots organizers like Stefan Solid research and accumulating experience (often through multi-stakeholder initiatives like the Ethical Trading Initiative) on how to actually introduce the LW in modern supply chains The galvanizing power of disasters – in particular the 2013 Rana Plaza collapse in Bangladesh, which killed over 1,100 people. In the words of C&A’s Philip Chamberlain ‘We must use the energy [generated by Rana Plaza] to approach this issue in a different way from the past.’ Since Rana Plaza, 14 garment companies sourcing from Bangladesh have signed up to four enabling principles for a living wage.

But before we go all Kumbaya about it, the report sensibly urges caution: ‘Very little has changed for very few workers. To achieve a tipping point, a more systemic approach is needed.’ As Jenny Holdcroft of the international union, IndustriALL says

‘If you carry on tweaking business as usual and finding nice examples to follow we’ll still be here in 20 years holding the same conversation.’

But still, the progress is remarkable – it’s hard to think of a more fundamental shift than that from allowing markets/ Darwinian supply and demand to set wages, to deciding on the basis of workers and their families need to live decent lives. The best way to eradicate poverty is surely to pay people properly.

The report is full of other examples and guidance for those wishing to promote the Living Wage – I urge you to take a look.

More from the briefing’s author, Rachel Wilshaw, here.

Editor’s Note: This blog was previously published on OXFAM and is reproduced with permission.

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