Implementing the Living Wage
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Transcript of Implementing the Living Wage
ETI NGO Caucus – implementing the Living Wage
Implementing the Living Wage
ETI NGO vision of the way forward
ETI NGO Caucus – implementing the Living Wage
Minimum wages & living wagesin some countries
Source: Miller, Doug and Peter Williams (2009) 'What Price a Living Wage: Implementation Issues in the Quest for Decent Wages in the Apparel Sector,' Global Social Policy 9(1): 99-125.
ETI NGO Caucus – implementing the Living Wage
Approaches
A. One-country approachB. Sharing Productivity gains C. Purchasing practices
ETI NGO Caucus – implementing the Living Wage
A: One-country approach
• Brands identify common suppliers • Negotiate pay scales with unions/workers• Transitional negotiations over increases
in product price if necessary• Preferential status for participating
suppliers (normal competition maintained)
ETI NGO Caucus – implementing the Living Wage
B: Sharing Productivity gains
• Brand support to ‘model supplier’• Efficiency gains ring-fenced to benefit workers• New Look (case study):
– Factory: production planning, HR systems, incentive scheme, welfare, worker consultation
– New Look: Forecasting (information and confirmed future orders), resources
• Wages raised (towards LW) while hours reduced
ETI NGO Caucus – implementing the Living Wage
Industry-wide
culture of long hours
and low pay
The Problem
Sustainable funding of
higher wages for
fewer working
hours
AimRobust HR framework
Worker consultation
Production incentive scheme
Improved IE and production planning
Welfare: provident fund and improved free nutrition
The project: in-factory
ETI NGO Caucus – implementing the Living Wage
Where are we on the journey?
Year 1 Year 2 Year 3
•Improved HR•Worker consultation•Workers committee•IE and planning•Production bonus•Trial lines•Improved welfare•Improved purchasing
•Roll-out incentives•Improve target setting•Formalise training facilities•Tackle overtime blips•Improve critical path•Improve purchasing
ETI NGO Caucus – implementing the Living Wage
Making a difference to workers?
Grade 7 (lowest paid) workers
% change y-o-yOT hours
% change y-o-yTake-home pay
February 08 -57% -6%May 08 -36% +15%July 08 -46% +24%
July Grade 7 average take-home pay 2940 Taka
Cost of improved lunch 675 Taka
Value of package 3615 Taka
ETI NGO Caucus – implementing the Living Wage
Worker turnover
ETI NGO Caucus – implementing the Living Wage
C: Purchasing practices – 4 point plan
1. Ensure informal workers paid Minimum Wage+– Impact on lowest paid workers (likely to be women)– Attenuate pressures for informalisation
2. Identify Living Wage benchmarks and monitor actual wages against benchmark(s)
– Audit basic pay of lowest paid (women) workers
3. Ensure workers at suppliers can negotiate4. Make wages a key factor in selection of suppliers
ETI NGO Caucus – implementing the Living Wage
Challenges
• Living Wage benchmarks
• Informalisation• Product cost• Sharing risk with
employer
ETI NGO Caucus – implementing the Living Wage
Facing the challenges I• Living Wage
benchmarks• Informalisation• Product cost• Sharing risk with
employer
…Stop arguing about how high the moon and raise wages!
• Must involve workers/ unions (& NGOs)
• Share information SAI,companies,NGOs
• Use all available benchmarks …JO-IN Wages Ladder
ETI NGO Caucus – implementing the Living Wage
JO-IN Wages Ladder
F2
F1F4
F3
Wage level 3
Wage level 2
Wage level 1
Prevailing
Minimum
Wage level 4 750 YTL
700 YTL
650 YTL
600 YTL
550 YTL
500 YTL
ETI NGO Caucus – implementing the Living Wage
Facing the challenges II• Living Wage benchmarks• Informalisation• Product cost• Sharing risk with
employer
…because raising wages raises pressure for informal work
• Start by ensuring informal workers paid at least MW– informal workers prevalent
eg Turkey Ecuador– Impact on women workers – ETI Homeworker
Guidelines etc
ETI NGO Caucus – implementing the Living Wage
Facing the challenges III
• Living Wage benchmarks
• Informalisation• Product cost• Sharing risk with
employer
• Labour small % of cost, modest impact
• Total Product Cost• Efficiencies
– manufacturer – in-house (eg sampling)
ETI NGO Caucus – implementing the Living Wage
Facing the challenges IV
• Living Wage benchmarks
• Informalisation• Product cost• Sharing risk with
employer
• Risk for supplier must be matched by ethical sourcing policy– Preferred supplier
status– Wages central to
selection of supplier
ETI NGO Caucus – implementing the Living Wage
Any questions?
ETI NGO Caucus – implementing the Living Wage
Impact on price – hypothetical case
Source: What Price a Living Wage, Miller and Williams, Journal of Global Social Policy (2009)