In sectors that employ and rely on masses of manual labor, such as the garment and footwear, food and beverage, consumer electronics or retail sectors, wages are often insufficient to cover workers’ basic living expenses such as food, clothing, housing, health care, and education. Research shows these wages are often on the poverty line and well-below living wage estimates.
Benefits of living wage
The benefits of paying a living wage are clear. Workers who earn a living wage can meet their own basic needs and those of their families as well as to put aside savings, thus being more likely to find their way out of poverty. They work regular working hours instead of excessively working overtime to make ends meet, and they are more likely to send their children to school instead of sending them to work. In short, our focus on living wage also advances the respect for a number of other fundamental human rights in global supply chains.
Objectives of the collaboration
Under the umbrella of the PLWF, financial institutions come together to encourage, support, assess, and monitor investee companies with regard to their commitment to pay a living wage to the workers in their supply chains. As recognized by, among others, the International Labour Organisation (ILO) and the OECD, living wage is a fundamental human right. Within the PLWF, we are strongly convinced that living wage is a salient human right that requires urgent attention by companies worldwide.
At the same time, we cannot expect individual companies to solve a systemic issue such as living wage on their own. This is precisely why we work with over 20 large listed garment and footwear brands and why we are seeking to expand to other sectors. By guiding and assessing the companies and building a ‘benchmark’ to determine which companies have been leading on the issue and which need to do more, we aim of motivate the ‘laggards’ to follow their better-performing peers.
Adherence to international guidelines and contribution to the 2030 Agenda
Finally, by engaging on living wage, we also honor our commitment to the United Nations Guiding Principles (UNGPs) and OECD Guidelines for Multinational Enterprises, wherein financials are asked to act with due diligence and to identify and mitigate salient human rights risks. In doing so, we also aim to help reduce poverty and stimulate economic growth and we perceive the engagement trajectory as a concrete contribution to advancing the United Nations Sustainable Development Goals, specifically Goals 1: ‘No poverty’; and 8: ‘Decent work and economic growth’.