Why paying a living wage is good for both workers and business

27 Sep 2018

To get insight into why paying a living wage is good for both workers and business, we outline, in a new series of cases, the ins and outs of our approaches towards the payment of living wage. We dive into the living wage strategy in Malawi that combines growth with improving worker conditions, the specific living wage interventions in the banana sector in Costa Rica, Belize, Ghana and Ecuador; as well as with the flower sector in East Africa.

The series address the challenge of compromised worker safety and insufficient pay, and the benchmarks for cost of living, which enable actors to “speak the same language”. In our interventions we create a framework for assessing progress, enable verification through audits, and identify the investment opportunities to enable growth of a sector which can help to absorb higher labour costs.

IDH supports different approaches to work towards the payment of living wages in different sectors, and in producing and sharing learnings on how companies and the private sector can effectively approach this often complex issue with all its partners.

One commonality in our approach is to convene coalitions of key sector players representing the entire supply chain, as well as civil society and governments, and to look at how approaches could be replicated/scaled.

The ultimate aim is to develop living wage implementation approaches embedded in commercial realities, balancing quality and quantity of jobs with the competitiveness of a sector and/or country. Only then a payment of a higher wage can be sustained. This relies on understanding and aligning supply-side and buyer-side competitiveness constraints and opportunities: building the business case into a roadmap for change.

Curious how we work to create room for the payment of living wages to workers? Explore the case study series here.

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