Guidelines for verification
IDH has developed guidelines for verifying living wage gaps preferably through third-party auditing and the corresponding base report, which serves as the physical evidence for third-party verification of living wage gaps. Guidelines have also been developed for first- and second-party auditors. These guidelines have been developed to support schemes and auditing bodies interested in verifying living wage gaps.
IDH established a partnership with the ImpactBuying Academy to provide training for trainers of auditors and directly to auditors that want to assist companies in the verification of living wage gaps. The training is based on the guidelines for verifying living wage gaps and the proper use of the Salary Matrix to support living wage auditing.
Salary Matrices have traditionally served as a self-assessment exercise. Ultimately, the desired scenario is that the utilization of the tool and the calculations of remuneration and how it compares to a living wage benchmark can be verified through audits by certification schemes that have living wage requirements in their standards. Currently, several programs are strengthening their certification standards and auditing procedures to include living wage related requirements. To support that process, IDH developed recommended guidelines for verifying living wage gaps through the appropriate use of the Salary Matrix. In future years, it is expected that verification can be performed by auditing schemes that adhere to these guidelines.
Living wage projects, led by diverse groups of partners and stakeholders, are taking place all over the world. As focus on this important topic has continued to grow, so too has the need for uniformity around how living wage gaps are calculated. Consistent and aligned living wage gap analysis is crucial to the effectiveness and credibility of strategies to close gaps and achieve decent standards of living for workers.
For buyers or traders that have supply chain partners all around the globe, alignment around both the living wage concept and how living wage gaps are measured is fundamental to building trust and the capacity to scale up. For producers and manufacturers that are asked to calculate the living wage gap at their production level, uniformity will ensure clarity and reduce inefficiencies.
To support this need, IDH has developed guidelines for verifying living wage gaps through auditing (for first and second-party auditors as well as third-party) and the corresponding base report, which serves as the physical evidence for third-party verification of living wage gaps. These guidelines have been developed to support third-party schemes and their auditors interested in verifying living wage gaps.
For companies interested in independent verification, IDH recommends working with fully trained auditing schemes that can help verify calculations on remuneration and living wage gaps through the appropriate use of the Salary Matrix and that have adhered to the use of these guidelines.
It is important to note that the living wage gap analysis is currently solely a self-assessment. While occasional data entry validation was completed, this, in no way replicates third-party, in-person audits. Field auditing, and most importantly interviews with employees and worker representatives, is critical for proper verification of wages, bonuses, and the value of in-kind benefits. Such conversations are essential to proper verification, as well as risk management. Without thorough verification, one cannot determine if any workers have been excluded noted and worker organizations have been consulted.
A key element of the Salary Matrix is the annual production volume. This volume is, essentially, the volume which the workers in the Salary Matrix have produced. If the volume is incorrect and does not correctly represent the volume produced by those included in the Salary Matrix, this greatly affects the overall calculation of the gap as some workers can be excluded.
3.2.1 What is the difference between salary matrix audits and pre-audit remote data completeness checks?
Pre-audit data completeness checks are a remote process used to check that the data entered into the Salary Matrix is: complete, in the correct format and to help identify anomalies in the data.
Remote data completeness checks do not replace the need for on-site audits to be performed to verify calculations of living wage gaps. Please click here to see IDH’s minimum recommendations for organizations to perform these Salary Matrix data checks. Please click here for the list of recommended consultants and auditing bodies we encourage companies to use.
Verification audits are in-person, second- or third-party inspections performed by auditing organizations that adhere to the guidelines for verifying living wage gaps. Audits consist of three equally important parts: 1) documentation review; 2) worker and worker representative interviews; and 3) field-level observations. IDH highly recommends that Salary Matrices get formally audited to support any claims about living wage gaps.
Please click here for the list of recommended auditing bodies we encourage companies to use.
Launching a robust training program for 1st, 2nd or 3rd party auditors is part of that Roadmap on Living Wages. It will enable auditors to verify living wage gaps and deliver a uniform report with their findings.
IDH established a partnership with the ImpactBuying Academy to provide training for trainers of auditors and directly to auditors that want to assist companies in the verification of living wage gaps. The training is based on the guidelines for verifying living wage gaps and the proper use of the Salary Matrix to support living wage auditing. With the ImpactBuying Academy taking on the auditor training for verifying living wage gaps, we take the next step in supporting companies in their living wage journeys.
Interest in the training? www.impactbuying.com/academy
This third step of the Roadmap on Living Wages seeks alignment in the way living wage gaps between recommended living wage benchmarks and current remuneration are calculated, and the way these calculations are documented and verified. Such verification can enable dialogue between producers and their buyers on progress toward living wages for workers, on the basis of verified calculations. Enabling this dialogue requires alignment on how the calculations and corresponding verification are done, independent of the body that performs the verification. IDH has developed several basic tools to facilitate this alignment, including the Salary Matrix and the Guidelines for Verifying Living Wage Gaps with the accompanying Base Report template.
For verification of living wage gaps, IDH strongly recommends working with third-party, independent schemes that have included living wages in their standards. Additionally, first and second-party auditing organizations can also support companies in moving forward in the verification of living wage gaps.
IDH recommends selecting auditing organizations that:
- Adhere to IDH Guidelines for Verifying Living Wage Gaps and deliver the associated base report for certificate holders.
- Verify living wage gaps against benchmarks developed by methodologies recognized through the Roadmap on Living Wages’ recognition process.
- Utilize the Salary Matrix (or equivalent tool) to calculated living wage gaps across all operations to be verified.
- Have trained auditors on the use of the Salary Matrix and the Guidelines for Verifying Living Wage Gaps.
The following organizations have committed to the requirements listed above. Following the links, you can access information about their trained auditors.
For the list of trained auditors from these organizations, please visit the Living Wage & Living Income Training – Impact Buying.
Important disclaimer: IDH is not responsible for the work these certification schemes and auditing organizations perform. These organizations have their own quality control and assurance programs and any complaint about their work needs to be brought up to them directly.
Dr. Lippert – Contact: firstname.lastname@example.org
Flocert – Contact: email@example.com
Heartwood LLC – Contact: firstname.lastname@example.org
Preferred by Nature – Contact: email@example.com