Working poverty is rampant in industries with large, complex and global supply chains such as the garment industry, where workers earn lower wages than what is required to provide a decent standard of living

Everyone has economic, social and cultural rights. These include the right to housing, food, water and sanitation, education and healthcare. A lot of people access these rights by earning a wage or income to pay for these goods and services. But not every worker has a wage high enough to meet these essential needs.

Nearly 241 million workers are living in extreme poverty worldwide meaning they don’t earn enough to ensure decent living conditions for themselves and their families. Working poverty is rampant in industries with large, complex and global supply chains such as the garment industry, where workers earn lower wages than what is required to provide a decent standard of living. 

Human rights and labour rights campaigners are calling for workers to be paid a living wage to bring people out of poverty and ensure decent work.

What is a living wage?

A living wage is the minimum income necessary for workers to meet their essential needs and realize their human rights. It factors in the cost of living, which includes essentials like;

• food,
• housing,
• energy
• water,
• sanitation,
• healthcare,
• education
• clothing
• and transportation

A living wage should be earned in a standard working week and not require excessive and exploitative work hours.

The cost of living varies depending on where you live.  Economists use complex methods and formulas, like the Anker methodology or the Asia Floor Wage Alliance calculations, to determine the wages that are required to achieve a decent quality of life. These methods also consider the impact of inflation on the cost of living.

Why is it a human rights issue?

Granting workers a living wage can lift them out of a cycle of poverty and allows them to access their economic, social, and cultural rights.

Requiring employers to pay their employees a living wage can also counteract a growing global gender pay gap that puts women at a higher risk of experiencing poverty than men. Globally, women earn 20% less than men. 

 The concept of a living wage is consistent with human rights guarantees contained in several pivotal international legal frameworks including the International Covenant on Economic Social and Cultural Rights which has been ratified by 172 states and the Constitution of the International Labour Organization which has 187 member states.

Paying a living wage makes economic sense too. The World Economic Forum estimates that global living wage for all workers could generate $4.6 trillion in extra GDP each year.

What countries require employers to pay a living wage?

There are no countries that legally require employers to pay their workers a real living wage that is determined by the cost of living and in line with the International Labour Organization’s (ILO) principles.

Even though the benefits of a living wage are clear and the concept aligns with international human rights law and standards, states continue to fail to make it a requirement within their national employment laws. Without these national requirements, it is almost impossible to stop employers from paying people a wage that puts them below the poverty line.   

Is a living wage the same as minimum wage?

Around the world, legally mandated minimum wages have been introduced to tackle low pay. However, these often remain inadequate.

They may not sufficiently account for the cost of living in a country and are sometimes not adjusted for decades. They could be based on figures like the median or average income to calculate benchmarks which then determine the lowest amount an employer can legally pay a worker.

When a government is specific about the lowest amount a worker must be paid, this often becomes the highest amount workers in some industries will ever make, without excessive overtime. As a result, for many people, the minimum wage serves as a ceiling rather than a floor.

Therefore, the minimum wage, although better than nothing, is much less effective compared to the living wage – and often traps people in a cycle of poverty.

Why are minimum wages so low?

The political and social narratives around minimum wages vary from country to country. But in almost every context, the debate has been dominated by the interests of the most wealthy and powerful in society. For decades, those in favour of keeping wages low have argued that stronger economic growth, often through the success of businesses is  ultimately beneficial to the rights and livelihoods of working people. This argument, which is often part of  a ‘trickle-down economics’ approach, has been largely disproven by research that demonstrates that “increasing the income share of the poor and middle class actually increases growth” whereas “a rising income share of the top 20% results in lower growth”.

Many workers in countries with developing economies are forced to survive on even lower minimum wages. This is because some businesses, often large multinational corporations, that benefit from the over production and over consumption of goods in high income countries, benefit from cheap labour, long hours and poor workers’ rights.

Example: Low wages in the garment industry

The structure of the garment industry and the nature of its labour-intensive business model means that companies often seek to lower their costs through cheap labour. States want to supply that cheap labour to attract investment from these companies. This creates a race to the bottom, as employers chip away at workers’ wages so they can compete for buyers. By setting minimum wage levels as low as possible, states also are creating a bigger gender pay gap since women are the most impacted by low wages, especially in the garment industry.

A global survey conducted by the International Labour Organization in 2017 confirmed that garment workers’ wages are also directly influenced by purchasing practices between brands and suppliers. Wages should instead be determined by what a worker requires to afford their most essential needs and rights.

This is a textbook example of how big brands often leverage their power and influence over regional suppliers to dictate costs, rather than acknowledging the true cost of the labour behind their products.

What can I do to help make sure everyone gets a living wage?

States have a legal obligation to respect, protect and fulfil human rights, which means they are duty bound to ensure workers are able to enjoy a dignified life for themselves and their families.

Campaigners and trade unions around the world are calling for their governments to acknowledge this duty and finally guarantee a living wage to all workers. These activists and organisers are leading experts on a human rights-based approach to fair wages and other labour rights, which is why states must make sure they’re involved in any process to improve wages and working conditions.

Work like this relies on everyday people like you to speak out and show your support so that together we can balance the scales of power and ensure that workers’ rights everywhere are guaranteed.