From the TUC

Living wages in global supply chains

17 Jan 2014, By

US fast food workers protest in Chicago for a $15 living wage. Photo: Steve Rhodes

US fast food workers protest in Chicago for a $15 living wage. Photo: Steve Rhodes

At long last, talking about raising wages is back in fashion among politicians. This is a major victory for trade unions who have been arguing that Britain needs a pay rise for years. But of course, talk is cheap, certainly compared with actually raising wages. And there’s a lot more talking to do to make sure that commitments and good will are turned into reality in people’s pay packets. We need to work out better ways of raising people’s wages than Government exhortation, employer goodwill, or even trade union demands.

It’s a huge domestic issue which could define the next General Election (as the Social Democrats tried to make it define the German election last autumn.) But it’s actually a global problem, stretching around the developed world (in the USA, Democrats have raised minimum wages in 13 states this month and the union campaign for a $15 minimum wage is gathering strength and popularity) and absolutely crucial to the developing world: people are poor for many reasons, but one of those reasons that has got far too little attention from development policies and agencies is that workers aren’t paid enough.

So it’s another positive sign that yesterday the Ethical Trading Initiative (ETI), bringing together many of the main global transnationals that populate our high streets, held a members’ meeting to discuss the living wage.

This isn’t the first thing the ETI has done about living wages. Awareness was raised during Living Wage Week last year with blogs about living wages in the banana and tea sectors, how they affect women, the prospects for change. Paying a living wage is actually one of the nine principles of the ETI to which corporate members commit. But all too often, the main priority is trying to drive compliance with minimum wages, factory safety and fundamental human rights down the supply chain. So it’s a major step forward that we’re now talking about raising wages in the countries of South and East Asia and beyond.

At the meeting we heard a lot from corporate members (admittedly, usually from the corporate social responsibility side) about individual initiatives to raise wages. Philip Chamberlain talked about the results the C&A Foundation has seen in a small group of factories in Bangladesh and India where basic wages had grown by at least 20% (with business benefits in lower absenteeism, turnover and production.) Jenny Holdcroft from IndustriALL argued that there was no need to go through complex matrices and research projects to find out what a living wage for workers should be: just ask them!

There was an openness to the case made by trade unionists for examining domestic employment and supply chains as well as global ones, and with so many of ETI’s members employing significant numbers of UK staff in retail for example, as well as sourcing products locally, this could be a major issue for unions in Britain. One high street brand (it was Chatham House rules, so speakers from the floor are guaranteed anonymity) explained that they were examining the pay of both their global supply chains and retail workers in the UK, to see whether they were being paid a living wage rather than just the statutory minimum.

Of course ETI tends to work horizontally, down corporate supply chains, but living wages are not easy to establish or sustain on a workplace-by-workplace basis, which is why national minimum wages, often inadequate, predominate in such discussions. What unions are pressing for (and this again demonstrates the global nature of the issue, because our demand is similar in the UK and countries like Bangladesh and Cambodia) is sectoral wage-setting machinery.

ETI will be taking this work forward in the coming months, and there is a working party of corporates looking at how to integrate living wages into global supply chains that we need to engage with. One key issue, here as much as in the developing world, is the relation between statutory minimum wages and living wages. And we shouldn’t lose sight of our objective of fair wages for all, which is different again: as US unions and others have argued, fair wages are what built the American middle class, and that meant far more than a living wage – it meant a new car and regular holiday trips (as well as braces for the kids’ teeth and rock and roll – why not?)

But it’s a good thing that wage rises are on the agenda, and in a globalised economy, a wage rise anywhere could mean a wage rise everywhere.

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