• Living wages have clear economic advantages
• Statutory minimum wages do not provide a living wage in many countries
• Position paper forms the basis for corporate dialog

Around one billion workers worldwide earn less than they need for a decent standard of living. That is around a third of all employees. We point this out in the position paper “Living Wages. The importance of living wages” there.

As fair wages bring clear economic benefits for national economies, companies and employees, we will take this as an opportunity to conduct targeted engagement dialogs with companies that have not yet made a comprehensive commitment to living wages.

“Living wages are not only an ethical imperative, but also in the interests of investors. Paying living wages increases productivity and reduces social tensions. With our commitments, we want to bring about a positive change and encourage companies to ensure living wages along their entire value chain,” says Dr. André Höck, Head of Sustainability and Strategy at EB-SIM.

Our three main objectives with Engagement Dialogs

We pursue three main objectives with our Living Wages engagement dialogs:

1. The companies addressed undertake to pay a living wage to all employees. There is a fixed target in terms of time.

2. The companies describe how they set a living wage for the regions in which they operate.

3. The companies are committed to paying living wages in their business relationships.

Living Wages have clear economic benefits. By closing the global living wage gap, global economic output could increase by an additional USD 4.56 trillion each year, contributing to economic growth. A study by the Living Wage Foundation with Cardiff Business School also shows that 93% of companies that pay fair wages benefit significantly.

Living wages are when the wages paid are sufficient to meet the basic needs of workers and their families. This includes housing costs such as rent, electricity, water and other ancillary costs as well as a healthy diet. Appropriate clothing, access to medical care and medicines as well as basic education for children also fall under this wage concept. In addition, wages should cover the cost of daily transportation to and from work as well as other necessary expenses such as leisure time, social activities and unexpected emergencies. Fair wages should enable workers to maintain an acceptable standard of living without working excessive hours or incurring debt.

Living Wages are not the same as the statutory minimum wage

Living wages should not be confused with a statutory minimum wage. The vast majority of member states of the International Labor Organization (ILO) have set a statutory minimum wage in order to guarantee basic income protection for employees. In 82 percent of all countries, however, the statutory minimum wage is below the living wage and does not adequately cover the actual cost of living.

The position paper “Living Wages. The importance of living wages” by EB-SIM is now available for download here: