Guzi, M., & Kahanec, M. (2019). Living Wages Globally. WageIndicator Foundation, Amsterdam

Guzi, M., & Kahanec, M. (2019). Living Wages Globally. WageIndicator Foundation, Amsterdam

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ABSTRACT

In most countries around the world, a national minimum wage is set by law and workers are entitled to this minimum wage. The national minimum wage levels need to be regularly adjusted to take account for fluctuations in the cost of living for working low-income households.[1]

Living wage is based on the concept that work should provide a minimum decent standard of living for a family. Living wage campaigns aim at lifting the minimum wage and to make minimum wage a living wage. The living wage is not prescribed by a law and, thus, cannot be legally enforced. Instead, living wages provide a benchmark for employers who voluntarily commit to pay wages according to the local living standards. Living wages can be family-, region- and time-specific and therefore they are very accurate.

Allowing people to lead a decent life is not only a moral obligation. It also encourages consumption by increasing a country’s purchasing power and by keeping employment rates up. Employers paying living wage benefit from lower turnover of employees and higher productivity gains. Despite the general agreement on the ethical and economic contributions a living wage would make, no common framework for calculating these living wages exists. Most organizations develop their own regional or national living wage models.

WageIndicator Foundation calculates living wages internationally in order to raise the awareness to the adequacy of national minimum wages. The calculation of living costs is based on the principles developed by Richard and Martha Anker for the Global Living Wage Coalition (Anker and Anker, 2017). The methodology is versatile and can be applied to all country and regional settings. WageIndicator uses the Cost-of-Living application specifically designed to gather the prices of items necessary to calculate the cost of living. The global collection of price data is innovative. Price surveys are posted online on national WageIndicator websites. In some countries with low Internet access, price information is collected by interviewers visiting markets and supermarkets, in addition to interviewing people about prices. The collection of prices has been very successful and since its introduction in 2014 until the September 2019, more than 2.2 million prices were gathered combined on all items in all countries. Because prices are collected continuously the presented living wages are always based on the actual price levels and can be regularly updated.

This report describes the approach to calculating living wages by WageIndicator and presents living wages for more than 70 countries on five continents (see the map below). Living wages are presented jointly with national minimum wages and prevailing wages of workers with the aim to raise the awareness to the existing gap between living wage and minimum wage. All information about living wages is published on WageIndicator websites and is available for comments.[2]

 

[1] ILO Minimum Wage Fixing Convention, 1970 (No. 131) states that minimum wage setting should involve social partners and independent experts and take into consideration: (i) the needs of workers and their families, taking into account the general level of wages in the country, the cost of living, social security benefits and the relative living standards of other social groups; and (ii) economic factors, including the requirements of economic development, levels of productivity and the desirability of attaining and maintaining a high level of employment.

[2]       https://wageindicator.org/salary/living-wage

 

Bibliographical information

Guzi, M., & Kahanec, M. (2019) Living Wage Globally. Amsterdam, WageIndicator Foundation, September.

Copyright 2019 by author(s). All rights reserved. WageIndicator Foundation, 2019
Address: P O Box 15966, 1001NL Amsterdam, The Netherlands
Email: office@wageindicator.org.


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