Top tips for tackling your living wage and living income gaps
19 October 2022
Our twentyfifty experts Hazel Culley and Helen Mant discuss the renewed urgency for companies to tackle the living wage and living income gaps and share their top tips.
It's time to get serious about a living wage and living income
The cost-of-living crisis has taken hold across the world as fuel, food and energy costs continue to rise dramatically while wages remain stagnant. For many workers, this has been their daily reality for decades. They have continuously lived with a widening gap between their income and the cost of living, which is now only getting worse.
1. It's a journey, so start now by getting the support of your colleagues in procurement, finance and human resources (HR).
2. We can save you time by helping you choose the right roadmaps, toolkits, benchmarks for your business.
3. A living wage/living income assessment is an ongoing process that needs to be integrated into your business operations.
Why is a living wage and living income so important?
Helen: It is increasingly accepted that paying a living wage/income tackles poverty and improves business performance. When a company pays its employees a living wage/income, it ensures that their pay is enough to cover household essentials as well as unexpected expenses and occasional emergencies. For any company committed to respecting human rights, it is simply the right thing to do and core to a good Human Rights Due Diligence (HRDD) process.
What is the business case for ensuring a living wage/income?
Hazel: There are many strong business reasons for investing in this now. Plenty of evidence links a living wage to improved business performance through boosted productivity, lower absenteeism and better staff attraction and retention. We also believe that workers who are well renumerated will be more resilient to changes.
Ensuring a living income for smallholder farmers in supply chains, who are not directly employed, is essential for the long-term consistent supply of raw materials. When farmers are not earning enough to survive, let alone thrive, they move to other crops or quit farming altogether. We have seen this happening for many years.
There is also increasing external pressure through upcoming HRDD legislation in Europe. A rising number of questions from investors/external benchmarks on a company's position and strategy to tackle it and an increasing need to show the impact they are making at scale.
How can twentyfifty help?
Helen: Our approach is collaborative and inclusive from the start. When a client is ready to tackle living wage/income, we ask them to bring in partners from the other departments that are key for establishing and implementing the process and its results (e.g. procurement, finance and HR). We then work with this wider team, raising their awareness and breaking the process down into manageable steps, whilst building their knowledge and confidence as we go. It’s important to remember this isn’t a one-off process, so enabling our clients to embed it into their business operations is really important.
What experience do you have?
Hazel: Our experience spans all levels of an organisation. At the global level, one of our projects was to design a roadmap for an FMCG company to guide the development of their corporate living wage commitments. We recently worked at the farm level in Africa, collating data on income, expenditure and discretionary spend to understand the living income of farmers. We have also helped clients understand the wage position of their employees by empowering them with the data and analysis needed to make executive-level decisions.
We make sure our approach is pragmatic. Whilst data analysis is important, the aim of this work is to ensure that action is taken and wages/incomes start to increase.
What is your advice for those just starting to look at this?
Helen: Start with the bigger picture. People working in your supply chain have the right to earn a decent living - what do you need to do to enable that? If a farmer can’t cover their basic needs, then they aren’t getting a living income. So, focus on addressing the root causes with a clear action plan that sets targets and tracks improvements.
It is important to understand the situation through a living wage/income gap assessment but remember that the results will only provide a snapshot in time. It can change rapidly because of external shocks such as the rise in inflation we are seeing today or global shifts such as the Covid pandemic.
Hazel: There are many roadmaps, toolkits and benchmarks that can make your living wage/income journey easier. We can save you time by helping to navigate them and advising you on which is most relevant to you and your business. We can also help you develop the right strategy to ensure that you are playing your part in closing the gap.
Remember that the only way to create lasting systemic change is to collaborate with your sector. Overcoming living wage/income challenges is complex and often requires collective action from you and your peers alongside NGOs and governments.
Any top tips?
Helen: Yes. If you are committed to solving living wage/income then start getting the support of your colleagues in procurement, finance and HR now and prepare to collaborate.
Getting top-level decision makers to consider living wage/income requires significant internal engagement. From creating a shared understanding of the concept and building the business case to Board level engagement, confirmation of the budget, external commitments and timescales. So, start now.
Any last thoughts?
Hazel: We are often asked ‘what does success look like?’ and the simple answer is ‘life-changing improvements for workers and farmers' as they move from survival to growing to flourishing. This is the most important reason to get going as soon as you can.
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Note on definitions
In our article, a decent standard of living is defined as the ability to pay for food, water, housing, education, healthcare, transport, clothing and other essential needs, including saving for unexpected events.
A living wage is the pay needed by a worker to afford a decent standard of living for themself and their family. It is the better measure for employees in a company’s value chain.
A living income is the annual income needed for a household in a particular place to afford a decent standard of living. It’s the better measure for workers in a company’s supply chain who are not directly employed, such as smallholder farmers.