The living wage: towards better industry practices

The concept of living wage goes back to the early twentieth century, with the creation of the International Labour Organization (ILO) in 1919. Subsequently, this concept was taken up several times in texts that played a structural role in labour law (Universal Declaration of Human Rights, Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy, and the ILO Declaration on Social Justice for a Fair Globalization).

The living wage also forms an integral part of the concept of decent work, a major goal for the ILO, which placed it at the heart of the new 2030 Agenda for Sustainable Development, adopted in 2015. The living wage is defined as a level of income that allows an individual to meet his basic needs and those of his family (food, housing, education, health, etc.).

Failing to remunerate work with a decent wage is a violation of human rights. That said, the lack of consensus on how to calculate this decent wage prevents the imposition of sanctions. This study enabled us to analyse the key issues related to the payment of a living wage in five sectors (retail, sportswear, technology, agriculture, construction) across 19 listed companies.

Knowledge of the supply chain, compliance with national and international labour standards, membership in industrial initiatives, the implementation of coherent methodologies and policies, were all identified as critical elements in an appropriate living wage strategy.

For each of these criteria, we defined:

• The key indicators used to estimate each company’s exposure to the living wage risk. This risk can be operational, regulatory or reputational, and may have significant financial consequences in the more or less long term.

• The key indicators used to assess the quality of the company’s strategy relating to the implementation of a living wage.

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