Living Wages: Guidelines for Building Your Strategy

12 June 2026

Why should companies want to pay a Living Wage?

Fiona: There is plenty of evidence out there that having a Living Wage strategy in place is a smart move. For employees, it means they can afford a decent and secure life for themselves and their families, leading to increased job security, satisfaction and purchasing power. For companies, there are many benefits too: it creates a healthier and larger market for goods and services, boosting business; and it lowers costs of recruitment, training and dispute resolution. The strategy ensures you can fit the question of Living Wages into your long term goal.

Is paying a Living Wage as easy as paying the Minimum Wage? Why should a company create a Living Wage plan and strategy?

Fiona: Let me start by saying that there is no set blueprint for what 'needs' to be done. However, experience shows us that it is wise to have a plan (or a strategy), especially if you work in a country or countries where the difference between Minimum Wage and Living Wage is substantial, and if you want to think about how to integrate Living Wages into your operations sustainably over the years. Arguments for this approach could be that it might take 5 minutes to allign Minimum and Living Wages, but it also can take a few years to get the lowest wages in a company up to a Living Wage level, which may require you to also think about a new pay structure. Questions may come up about redefining the distance between lowest paid and highest paid, as well as the addressing a (possible) gender pay gap.

After a company has a plan or strategy, what's the next step?

Fiona: As soon as a company has a plan and/or a strategy, it is wise to share the plan within the organisation and with employees - and if you're up for it already - with other external partners such as trade unions and peers. It's advised to discuss the strategy with those that will also have to deal with it, such as the different departments in your operations like HR, Procurement, and Sustainability to ensure more buy-in and less surprises along the road. Be vocal about it. At least internally. And check and adapt the plan each year. A plan might change because of new regulations, upcoming or exsiting directives, a shift in countries estimates because of extreme inflation, or other issues. We have a nice saying in Dutch about being prepared for the future: share lessons learned and become adaptive together!

Can a company use different Living Wage data providers?

Fiona: We see companies who use different data providers for Living Wages in their strategy. It's not a problem, since the biggest data providers, like the Anker Research Institute, Fair Wage Network and WageIndicator estimates do not differ that much and what matters is the path towards closing the wage gap. It is wise to keep in mind that you have to argue why you use a data point for a certain region in the country. If the argument is: you were looking for the cheapest options, this might not be accepted by auditors. But when you argue that there were possible, or you prefer a local data provider such as Living Wage Foundation in the UK, this might be a good argument. Our answer is often: make the best choice for your company, and be consistent and transparent about your choices so you can easily explain them - internally, to auditors, to trade unions and employees.

Should a Living Wage strategy be embedded in a pay strategy or is it better to keep this separate?

Fiona: We think it's smart to make a larger strategy and execute this in an holistic plan that connects all the dots. This could include, for example, steps to close Living Wage gaps, ensuring Minimum Wage compliance, tackling gender pay gaps, while working towards pay transparency. We see that many companies develop a strategy that can take a few years and with that, it can adjust their action plan where needed or when issues arise. The strategy would ideally be embedded in the organisational mission, vision and culture, and it relates to how you teams work with third party contractors and suppliers. Ideally, it is an holistic approach focusing on Living Wage, but also on eliminating gender gaps, promoting equal pay, and checking for biases towards migrant workers, younger employees and potentially marginalised groups within the company. The perfect strategy - and therefore action plan - has an eye for different generations and life-long-learning.

When having a Living Wage strategy, should that be revised every year?

Fiona: A plan and a strategy should be revised, for sure. If you take the European Pay Transparency Directive seriously, you have to scan your strategy and make sure you are in line with the directive. If you want to have a Living Wage strategy for your own workforce, but also your supply chain, you need to review it and update it regularly. It should be like a living document.

What questions should always be addressed in a living wage strategy and plan?

Fiona: 1. The first question to ask is, 'Why a living wage?' What is your 'why'? It could be because it's good for business, because you want to comply with existing regulations and frameworks, or because you want to enable your employees to live decent lives. Start by finding the main purpose.

2. Then ask: which Living Wage? Which data provider would you like to refer to? Would you like the policy to cover bonuses, allowances and in-kind benefits?

3. When should this strategy be implemented? 2026, next year, or later? When planning to get started, we believe that perfection is not the goal, but making some progress is. You will never be 100% perfect, so don't let the desire for perfection stop you.

4. Who? Which group of employees should be included? Should it just be full-timers, or also part-timers, the self-employed and contractors?

5. Where? Which countries should you cover? Would it work for you to start with the country with the largest Living Wage gap.

6. Finally, what is the relationship between a Living Wage strategy and policy? Should it also cover pay philosophy, community care, environmental policy, intergenerational policy, gender policy, pay transparency policy, and remuneration for top roles, including those of leaders and CEOs?