Living wage

By ‘living wage’, we mean the amount of money an employee needs to meet their basic needs, both for themselves and for their family. Among other things, the salary must be enough to put food on the table, send your children to school, and pay for healthcare and housing.

What is the impact of wages that are too low?

Worldwide, the statutory minimum wage is often too low to live on, or does not even exist. The result:

• long working days,
• debt, and
• an increased risk of child labour.

Women and young people are disproportionately affected by precarious contracts and unequal pay. Other risk factors include the fact that, in many manufacturing countries, there is limited scope for free trade unions, whilst companies are simultaneously under pressure from tight margins and short lead times.

Many workers put in excessively long days and working weeks because they cannot make ends meet on a ‘normal’ working week. The hourly wage is too low, and there is therefore no question of a living wage. Moreover, when parents are underpaid, there is a risk of child labour.

For example, in the palm oil and sugar sectors, where the whole family often works to make ends meet.

You also often see that women and men are not given permanent contracts, or any contract at all. This means they have no job security and are in a weak position to negotiate a fair wage; after all, anyone who voices criticism can easily be replaced by someone else.

The worker’s position of dependency means they cannot refuse the work. These forms of disguised forced labour are particularly common amongst migrants and others who rely on accommodation provided by the company. Sometimes it even goes so far as to the point where passports are confiscated, so that the worker cannot leave. Workers on remote palm oil plantations are also often highly dependent, as the plantation owner usually provides accommodation as well.

In addition, there is often a pay gap between men and women. For example, female garment workers in Cambodia, Sri Lanka and India are paid between 10 and 40 per cent less than men.

Some companies refer in their CSR policies or codes of conduct to less stringent local laws and customs; these then serve as guidelines for company policy. This can lead to significant differences between the countries in which a company operates.

Local authorities, too, sometimes apply double standards. Some low-wage countries recognise the need for a living wage. At the same time, they also create free trade zones (export processing zones) to attract companies and stimulate the economy. Here, standard labour legislation often does not apply, and international companies are given extra leeway. Employees in these zones are often not free to organise themselves into independent trade unions. As a result, there is little oversight of living wages.

Furthermore, the wage rate within a company often applies only to permanent staff. Flexible workers and agency workers often earn less. A company must include in its personnel policy that equal pay for equal work must be paid to all employees, including agency staff.

Our approach

CNV Internationaal is working towards structural solutions: we strengthen local trade unions, support sectoral and company-level collective agreements, and highlight the pay gap through the Fair Work Monitor.

Based on this data, a dialogue is established between workers, employers and buyers regarding what is needed to achieve a living wage — including a focus on procurement practices, gender equality and safe working conditions.

• To achieve a sustainable living wage – that is, a wage that will remain a living wage in the future – effective negotiations between independent and representative trade unions and employers are essential.
  
• To achieve living wages in a sustainable manner, CNV Internationaal emphasises that it is crucial to involve workers and their trade unions in this process from the outset
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• CNV Internationaal initiates, guides and encourages processes to reach Collective Bargaining Agreements (CBAs), where possible across multiple companies; we support this through advice and training, for example in negotiation skills.
  
• Together with our partners, we build sustainable agreements: clear, achievable and enshrined in policy and contracts. A living wage is therefore not only a social necessity, but also a strategic prerequisite for resilient supply chains.