Various initiatives by multi-stakeholder platforms, businesses, governments and trade unions in Europe have undertaken activities aimed at working towards a living wage in international supply chains. Nevertheless, questions still remain referring to best practices to integrate the living wage concept into corporate strategy and the implementation in supplier factories on the ground. Equally, it is becoming increasingly important to coordinate different approaches and combine efforts.
In 2012, the Round Table Codes of Conduct, which is supported by the German Federal Ministry for Economic Cooperation and Development (BMZ), organised a dialogue meeting on the living wage. In parallel, the Netherlands Ministry of Foreign Affairs (BUZA) also organised a round table on the living wage in Utrecht in 2012. Joining forces at European level, the Round Table Codes of Conduct and the ministries involved decided to work together to maximise their impact. They agreed to actively involve companies, unions, similar multi-stakeholder forums, other European governments and further relevant stakeholders in order to create a joint action plan to be discussed and finalised at a European Conference on the living wage on 25 and 26 November 2013.
What is the aim of the action plan on living wages and of the European Conference?
The aim is to draw up an action plan on implementing living wages specifically in the industrial sector in Asia. This action plan should be drafted and discussed during an ongoing stakeholder engagement process and should form a central part of the conference in November. It is intended to become a key element of the follow-up process after the conference. The action plan should define the roles that different actors play in addressing the challenges of implementing living wages, building on the foundations laid in the international normative framework (UN Guiding Principles on Business and Human Rights, OECD Guidelines for Multinational Enterprises, and the International Labour Organisation (ILO) MNE Declaration). Existing initiatives and approaches will be a central part of this process and solutions will be found to promote the topic of the living wage. In addition, new stakeholders with an interest in the subject who are willing to incorporate living wages into their agenda will be involved in this process.
The conference will bring together a significant number of decision-makers from Europe as well as partners from developing countries to take action and discuss the implementation of the plan. They will share best practices, discuss the coordination of existing approaches and also agree upon a possible follow-up structure involving current initiatives.
- What is a living wage?
A living wage is a wage that meets the basic needs of the worker and his or her family. Basic needs are food, housing, clothing and other expenses, such as education and medical costs. Even though legal minimum wages exist in many developing countries, they often do not cover basic needs. Sometimes minimum wages are high enough in theory, but they are not applied and enforced in practice. Workers in these situations will take on excessive amounts of work in an attempt to raise themselves and their families out of poverty.
- Corporate responsibility to respect human rights
A living wage is internationally considered as a human right. The United Nations Universal Declaration of Human Rights (1948) and various declarations and conventions of the International Labour Organisation (ILO) recognise the need for workers to receive ‘fair wages and equal remuneration’ (International Covenant on Economic, Social and Cultural Rights) that are ‘adequate to satisfy basic needs of the workers and their families’ (Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy, 2006). The Guiding Principles on Business and Human Rights (2011), endorsed by the UN Human Rights Council, state that business enterprises have the responsibility to respect human rights in countries where they operate. This responsibility applies to their own activities, as well as to their business relationships in the supply chain. A living wage is thus a part of corporate social responsibility and responsible supply chain management.
- Business case
Rising labour costs may be compensated by other benefits such as attracting skilled labour and lowering employee turnover, which limits training costs, and by increasing consumer prices, possibly supported by a sustainability label or sustainability marketing. Other benefits may derive from an enhanced reputation and suppliers that pay living wages are often professionally managed companies.
Putting it into practice: what is the current process?
In preparation for the conference, GIZ/BMZ/BUZA are conducting the above mentioned broad stakeholder engagement process, including a number of stakeholder meetings and written consultations, to develop a joint action plan on the living wage. The results from these meetings and the ongoing consultation process will be further discussed and finalised at the conference on the living wage in November. The consultation process and conference are open to all relevant stakeholders and contact details can be found below.
Please join us in drafting the joint action plan on the living wages and be part of the conference!
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