The International Labour Organization (ILO) recently held a discussion and made recommendations on living wage policies for countries globally.
This agreement, finalized during a Meeting of Experts on wage policies in February, recently received endorsement from the ILO’s Governing Body during their latest session.
The meeting was chaired by Zaskia Nathalie Cely and had in attendance representatives of governments, employers, and workers, alongside observers.
Its objective was to review wage-setting processes, recent living wage initiatives, define living wages, and explore how the ILO can support constituents on wage policies.
The meeting therefore outlined essential institutions and principles for wage setting, emphasizing collective bargaining, consideration of workers’ needs and economic factors, promotion of gender equality, utilization of reliable data, and adaptation to national circumstances.
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According to the experts, the concept of a living wage refers to:
- “The wage level that is necessary to afford a decent standard of living for workers and their families, taking into account the country circumstances and calculated for the work performed during the normal hours of work.”
The challenges around worker’s wages
Despite global increases in real wages, challenges remain, such as the disconnect between productivity gains and wages in certain high-income countries and the prevalence of low-wage workers living in poverty globally.
Also, even though recent initiatives on living wages have shown progress, they often lack adherence to key ILO principles, such as social dialogue and economic factors.
The discussion therefore focused on operational using living wages which requires nuanced strategies, including collective bargaining, incremental progression from minimum to living wages, national ownership, gender equality, robust data usage, addressing root causes of low pay, state involvement in public services, and encouraging formalization of the economy.
Recommendation for future action
The experts concluded that fair wages are important for both economic and social progress and are instrumental in promoting social justice.
Moreover, they are crucial in mitigating poverty and inequality while guaranteeing a respectable and dignified standard of living.
The agreement therefore stipulates that the estimation of living wages must adhere to several principles, such as employing evidence-based methodologies and robust data, engaging with workers’ and employers’ organizations, ensuring transparency and public availability, and taking into account regional and local contexts, as well as socio-economic and cultural realities.
Further, it was agreed that to achieve living wages, wage-setting processes should align with ILO principles. This entails bolstering social dialogue and collective bargaining mechanisms and empowering wage-setting institutions.
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The document also recalls that,
- “The needs of workers and their families and economic factors are the two pillars of wage-setting processes.
- “Living wages should not be a one-size-fits-all approach and should reflect local or regional differences within countries.
- “A sustainable strategy to promote living wages should go beyond the realm of wage-setting mechanisms alone and include a broader consideration of factors.”
While there has been a positive long-term global trend in average wages, millions of workers worldwide, spanning both formal and informal economies, still earn wages significantly below the cost of living, trapping them in poverty.