SOS Children’s Villages Sets to Introduce Living Wages in 137 Countries and Territories

“Developing Living Wage standards within an NGO employing 38,000 individuals across 137 countries feels akin to the daunting task of slicing an elephant into manageable pieces. NGOs often face intense scrutiny, particularly regarding how donations are allocated to staff wages unrelated to direct beneficiaries. While acknowledging practical limitations is crucial, it's equally vital to send a resolute message: we adamantly refuse to pay below the living wage standard. In German, there's a term, 'existence minimum,' encapsulating the idea of a living wage as the bare minimum needed to fulfil basic needs,” says Gregor Loetsch, Head of Compensation and Benefits at the SOS’s Children’s Villages.

WageIndicator spoke with Gregor Loetsch, discussing his organisation's strong belief in living wages. They talked about SOS Children’s Villages' efforts to implement living wages across 137 countries and territories, and the unique challenges the NGO faces in pursuing this goal.

Could you describe what SOS Children’s Village does and provide some insight into the nature of the workforce you deal with?

I work at the General Secretariat of SOS Children’s Villages, which is organised as an international office along with regional offices to provide services and support to the member associations within the Federation of SOS Children's Villages. Our organisation operates in roughly 137 countries and territories worldwide, employing about 38,000 individuals. Our focus is on assisting children and youth who have lost parental care or are at risk of losing it. We offer various forms of support, including family-like care, traditional children's villages, family strengthening programs, education initiatives, healthcare services, and emergency response efforts.

Our workforce is involved in program delivery, fundraising, and administrative functions such as human resources, finance, IT, and legal support. Ensuring a living wage for everyone is a priority. Employment contracts are always governed by local laws, as we operate within the framework of each country's legal system and prioritise local expertise and knowledge.

Could you elaborate how you are planning to implement the Living Wage across your operations?

Our management council initiated the establishment of a global standard. Their goal is to achieve competitive wages by 2030, crucial for attracting and retaining top-tier talent essential to our mission. Currently, there's a disparity between legal minimum wages and what's needed for a decent standard of living. Therefore, our immediate focus is on transitioning towards living wages by 2027, particularly recognizing the prevalence of minimum wages below subsistence levels in many countries, especially in the global south.

As a non-profit organisation heavily reliant on skilled professionals, we value fair compensation. "Competitive wages" denote remuneration sufficient to attract and engage talent, though it's a higher target compared to the "living Wage." However, transitioning presents challenges, especially in regions where our projects receive funding subsidies. Ensuring fair compensation requires aligning personnel costs with living wages through meticulous planning and adjustments.

One challenge we face is maintaining equity; implementing living wages may improve pay for some, but it can disrupt relative pay scales between different roles.

Addressing this requires additional funding to uphold equity. We're actively addressing these challenges and piloting solutions in Bolivia and Georgia to implement living wages within legal frameworks. This involves adapting contracts and addressing wage differentials to ensure fairness and sustainability. However, given the complexity of our organisation and ongoing projects, implementing these changes will take time and iterative planning cycles.

What key lessons have you learned throughout the process?

We have realised that implementing living wages across our operations is a multifaceted challenge that requires careful planning and strategic foresight. We've made progress by identifying the problem and breaking it down into manageable work packages, akin to slicing an elephant piece by piece. Through pilot projects, we're demonstrating practical methods of implementation. However, transitioning to living wages on a global scale is not a quick fix; it will require several cycles of project planning and adjustments to personnel costs.

Like any organisation, we operate within a complex ecosystem of ongoing projects, established salary structures, and member associations with their own unique contexts. These elements cannot be radically changed overnight. Moreover, anticipating and addressing future challenges is paramount. We need to plan for contingencies years in advance, including projecting living wage needs well into the future, recognising that economic conditions evolve rapidly.

In addition to internal considerations, we must also navigate external factors such as limited funding opportunities. While the demand for our services continues to grow, resources are finite. This necessitates a shift towards financial sustainability within our member associations. By adopting living wages as a standard, we aim to safeguard against wage deterioration and ensure the long-term viability of our mission.

Addressing these challenges is an ongoing process that requires patience, collaboration, and a commitment to our core values. While the journey may be lengthy, it is essential for maintaining the integrity and impact of our organisation in the years to come.

Why did you decide to implement a living wage when it is so difficult?

I view it as a strong declaration that we seek individuals of the right calibre to advance our mission. We can't expect people to work for minimal or no compensation. It's imperative to offer adequate remuneration. However, we must also acknowledge that NGOs undergo constant scrutiny, especially regarding the allocation of donations toward wages for staff who aren't direct beneficiaries. This scrutiny prompts a necessary discussion, and we must strive for a balanced approach. For me, that balance is easily articulated as a living wage—a clear message that we refuse to pay below this standard. Anything less would convey a detrimental message, undermining our commitment. In German, there's a term, 'existence minimum,' which aptly describes the concept of a living wage as the absolute minimum necessary to meet basic needs. This explanation serves NGOs well when accounting for wage expenditures in donation allocations.

Once you've conducted a survey and identified wage gaps, should you prioritise addressing small gaps or tackle the largest ones first? What does industry wisdom suggest?

Indeed, it's a thought-provoking aspect because it guided our selection of pilot projects. We aimed for pilots with manageable gaps because proposing a solution to a member association facing a drastic need, such as doubling their pay, wouldn't be a feasible starting point. So, it's a valid inquiry, and I approach it cautiously. Our aim is to pinpoint where the most significant gaps lie and to consider various metrics like turnover rates, employee engagement levels, recruitment duration, and instances of candidates rejecting offers due to salary considerations. Identifying areas with highly unfavourable indicators is crucial because one of our primary goals is maintaining stability in our relationships with beneficiaries, particularly children and young people. If financial instability leads to staff turnover, it can profoundly impact these relationships negatively. Therefore, we must remain receptive to such signals.

However, this is the most comprehensive response I can provide at this stage because addressing this issue presents a significant operational challenge. It involves planning effectively, implementing strategies within local legal frameworks, accommodating existing contracts, and ensuring fairness across various job roles. Such processes require time, and certain countries may be better equipped to handle them than others. Some may have smaller initial gaps, enabling them to manage the transition more smoothly, or they may have access to diverse funding sources, governmental support, or overall favourable conditions. They might also have the flexibility to adapt projects to different mechanisms, enhancing their resilience. Therefore, our next step is to identify what resources and capabilities member associations require to meet this ambitious objective.

Could you discuss some of the challenges you've faced during the process?

Similar to many NGOs, we face the ongoing challenge of securing funding for our initiatives. When one of our network associations is experiencing funding shortages, advocating for increased budgets to improve wages becomes a challenging task.

Nevertheless, it's essential to underscore that despite these hurdles, our commitment to upholding living wages remains steadfast. While the timeline for implementation may be uncertain, the principle remains clear: living wages are ethically imperative.

Criticism regarding living wages often revolves around market dynamics and the balance between supply and demand. While understanding market benchmarks is valuable, it's essential not to prioritise market forces over basic human needs. Ultimately, our goal is to ensure people's livelihoods are protected, and this principle must guide our decisions. I believe clear and compelling explanations are vital in garnering support, and ensuring that individuals are not left in dire circumstances is a principle that resonates deeply within the NGO community.

How has the WageIndicator Foundation aided you in the process?

The adoption of this methodology has proven beneficial as it offers a universal framework applicable across our entire organisation. About eighteen months ago we reflected what a realistic common orientation of remuneration across the federation should be, and that’s where “competitive wages” as the higher, and harder to reach aim, was complemented with “living wages” as a more realistic and reachable goal in the mid-term was defined. Since then, we've engaged in detailed deliberations, aided by methodologies offered by WageIndicator Foundation, which offers a consistent framework globally.

Our exploration has encompassed various facets and considerations, including the impact of benefits on salary levels and the potential inclusion of family status in compensation calculations. These conversations have prompted contemplation of philosophical questions regarding the intricate dynamics of individual circumstances and their implications for wage determination. While we've leaned towards adopting a standard family model recommended by the WageIndicator foundation, ongoing dialogue surrounds the incorporation of factors like household size, and therefore opting for Typical Family.

June, 2024

Update 27 June 2024 - SOS Children’s Village has 38, 000 employees and not 137,000 employees which was stated in the article.