Steps towards a living wage: Oxfam’s guidance for companies

Date: 01/04/2015

oxfamreportIn December 2014, Oxfam International published its policy paper Steps Towards a Living Wage in Global Supply Chains. The paper outlines some compelling reasons for responsible companies to act now for living wages and examines positive developments on wages.

Below are Oxfam’s recommendations for companies with regard to wages, excerpted from the report:

Look inwards

  1. Put your own house in order. Are you paying a living wage to your own employees and contracted workers? How many have secure contracts?
  2. Table a discussion at a Board meeting. What is the case for action? What does human rights ‘due diligence’ look like for your company? Consult employees and the union. Calculate the gap between CEO and average pay of employees, and between CEO and the minimum wage of workers in your key supply chain, and compare with the company’s values.
  3. Review your policy. Even if it already includes a living wage, publish a statement acknowledging concerns about low wages and make a meaningful commitment.
  4. Develop a plan with short- and longer-term elements that includes collaboration.
  5. Be transparent: report the proportion of workers in your key supply chain who have secure contracts, earn a living wage, and have the opportunity to join an independent union.
  6. Discuss the case for disclosing your supply chain, at least to first tier of manufacture.

Look at sourcing strategy and supply chain management

  1. Map the supply chain for the 20 percent of suppliers who supply 80 percent of your products and identify the suppliers which are ‘high risk and high leverage’ in relation to wages.
  2. Invest time with suppliers to understand the barriers and the business case for them to take action. Jointly estimate the proportion of workers in ‘low road’ jobs.
  3. Calculate hidden costs such as undisciplined sampling, recruitment and training, and managing audits. How could value be freed up to support collective bargaining?
  4. Maintain wage data on workers (women and men) including social security, overtime premiums and paid leave and remove these from price negotiations.
  5. Encourage suppliers to develop good management systems and remove barriers to freedom of association and collective bargaining.
  6. Offer preferential treatment and incentives to suppliers with a credible improvement plan and provide some ‘security of demand’ through longer-term contracts.
  7. Where you cannot influence wage levels (and only there), work with suppliers to reduce workers’ outgoings, after consulting workers e.g. free meals, wi-fi or child-care vouchers.

Look outwards

  1. Work with others on a common understanding of wage gaps and their implications, using benchmarks and wage ladders. If benchmarks are not available, support their development using a recognized methodology.
  2. Go beyond a ‘factory by factory’ approach and look at clusters of employers or sectors.
  3. Develop a co-ordinated approach to influencing a public policy debate with governments, for instance as part of an industry association.

Whatever your company does…

  1. Don’t use lack of certainty about the level of a living wage as a reason for inaction.
  2. Don’t do anything that gets in the way of workers being able to bargain.
  3. Don’t lobby for lighter regulation of labour laws.

Read the full report.

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