Implementing the Living Wage

1. Implementing the Living Wage ETI NGO vision of the way forward ETI NGO Caucus – implementing the Living Wage

2. 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

3. Approaches • One-country approach • Sharing Productivity gains • Purchasing practices ETI NGO Caucus – implementing the Living Wage

4. A: One-country approach • Brands identify common suppliers • Negotiate pay scaleswith 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

5. 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

6. The project: in-factory The Problem Aim Robust HR framework Industry-wide culture of long hours and low pay Worker consultation Sustainable funding of higher wages for fewer working hours Production incentive scheme Improved IE and production planning Welfare: provident fund and improved free nutrition ETI NGO Caucus – implementing the Living Wage

7. 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

8. Making a difference to workers? ETI NGO Caucus – implementing the Living Wage

9. Worker turnover ETI NGO Caucus – implementing the Living Wage

10. C: Purchasing practices – 4 point plan • Ensure informal workers paid Minimum Wage+ • Impact on lowest paid workers (likely to be women) • Attenuate pressures for informalisation • Identify Living Wage benchmarks and monitor actual wages against benchmark(s) • Audit basic pay of lowest paid (women) workers • Ensure workers at suppliers can negotiate • Make wages a key factor in selection of suppliers ETI NGO Caucus – implementing the Living Wage

11. Living Wage benchmarks Informalisation Product cost Sharing risk with employer Challenges ETI NGO Caucus – implementing the Living Wage

12. 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 Facing the challenges I ETI NGO Caucus – implementing the Living Wage

13. Wage level 4 750 YTL F2 Wage level 3 700 YTL F1 F4 Wage level 2 650 YTL Wage level 1 600 YTL F3 Prevailing 550 YTL 500 YTL Minimum JO-IN Wages Ladder ETI NGO Caucus – implementing the Living Wage

14. 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 Facing the challenges II ETI NGO Caucus – implementing the Living Wage

15. 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) Facing the challenges III ETI NGO Caucus – implementing the Living Wage

16. 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 Facing the challenges IV ETI NGO Caucus – implementing the Living Wage

17. Any questions? ETI NGO Caucus – implementing the Living Wage

18. Impact on price – hypothetical case Source: What Price a Living Wage, Miller and Williams, Journal of Global Social Policy (2009) ETI NGO Caucus – implementing the Living Wage