A living wage: a crucial tool in the fight against modern slavery

This article was co-authored by Walk Free Intern Constance Flake and Research Analysts Stella Freitag and Elise Gordon.

Clothing, chocolate, coffee. Many of the workers that produce these, and countless other products, are vulnerable to forced labour and hazardous child labour, two forms of modern slavery.

Workers who live in poverty are disproportionately affected by these issues. As determined by Diego-Rosell and Joudo Larsen (2018), individuals that found it ‘very difficult’ to live on their current wage were more likely to have experienced forced labour.

Ensuring an established living wage for workers at every stage of the supply chain lessens the likelihood of individuals becoming victims of forced labour or child labour. A living wage is the estimated lowest income required for a worker to afford a decent standard of living for themselves and their family. There are a range of needs to be considered when determining a living wage, as shown in Figure 1.

A living wage is particularly necessary in sectors producing raw materials and sectors staffed by low skilled workers, as both have a high risk of exploitation. For example, the agricultural sector is particularly vulnerable to exploitation, due to its dependence on external factors such as the weather, the environment, and changes in world market prices.

A study by the Ethical Trading Initiative, found that “without a living wage, workers may be compelled to work excessive overtime hours or multiple jobs, become bonded labourers, put their children into work instead of school, be denied their basic human rights to food, shelter, nutrition, health, housing and education and be unable to withstand crises such as ill health.”

And there’s no argument not to. Not only does the payment of a living wage improve workers’ lives, it can also have financial gains for businesses, as a result of increased productivity. Businesses that have workers who are paid a living wage have higher retention rates and are more efficient.

The universal payment of a living wage is far from a reality. Walk Free’s study of forced labour and child labour in the cocoa sectors of Cote d’Ivoire and Ghana found that, of the farmers interviewed, 71 per cent earned less than the living wage estimated by Fairtrade International of $2.51 per day. Additionally, Fairtrade’s 2018 study found cocoa farmer households in rural Côte d’Ivoire that were part of cooperatives (an independent organisation of farmers who combine their resources for mutual benefit) earned only 37 per cent of the estimated living income.

Last week, Oxfam Australia published research on wages in the fashion industry that found 100 per cent of the 472 garment workers interviewed in Bangladesh, earned below the living wage. To fill this income expenditure gap 87 per cent of workers took out loans and 56 per cent made purchases on credit. In Vietnam the report found that 99 per cent of workers earned below the living wage recommended by the Asia Floor Wage, and 74 per cent earned below the rate established by the Global Living Wage Coalition.

Fortunately, there are companies ahead of the curve, that are taking real action to ensure workers within their supply chains are receiving a fair wage. In response to the high rates of child labour in the West African cocoa sector, Dutch company Tony’s Chocolonely, pays an additional premium to the cocoa farmers it sources its beans from. This premium is determined annually and takes into consideration both the market price of cocoa and the sector’s recommended living wage.

There are also examples of efforts to improve the wages of low skilled workers in more developed countries, with larger multinational companies such as Ikea ensuring they pay their employees a living wage.

Ensuring a living wage for workers at every level of a business’ supply chain is not a simple process. However, a number of tools exist to aid businesses on the road to generating ethical supply chains; Road Map to an Asia Floor Wage,  Road Map to a Living Wage, Getting to a Living Wage: Recommendations for Brands, A Sewing Kit for Living Wages, and Living Wages in Global Supply Chains.

Consumer action can also make a difference to the lives of workers, as purchasing trends can greatly alter market demand. If consumers make themselves aware of companies that are conscious of the need for an established living wage within their supply chains and
are committed to providing a fair wage for their employees, and they actively choose these businesses, less scrupulous companies will have to take notice.

Establishing a living wage should be the minimum standard, but looking forward it is not a silver bullet. Another key step to achieving decent working conditions is ensuring the promotion of freedom of association and collective bargaining for employees. This enables employees to effectively negotiate wages and working conditions with their employer in the future. Furthermore, it is essential to continuously review the established cost of living and to ensure the methodology used to calculate a living wage is up to date.

Establishing and adhering to paying a living wage at every level of a business’ supply chain is essential in the fight against modern slavery.

Ensuring workers have the means to support themselves and their dependants will decrease the risk of forced labour and child labour in some of the world’s most vulnerable industries. Doing this will not only massively improve the quality of life for workers on the front line, but the benefits of doing so will be felt across the world.