The case for living wages: How paying living wages can improve business performance and tackle poverty and inequality
16 May 2022 - Business Fights Poverty, the University of Cambridge Institute for Sustainability Leadership (CISL), and Shift publish a new research paper detailing the multi-layered benefits that living wages offer businesses, including within core operations, value chains and the wider operating environment.
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The payment of living wages remains one of the most powerful routes to help people out of poverty, start to tackle inequality, realise human rights and achieve the Sustainable Development Goals (SDGs). There is growing recognition that poverty wages pose a significant barrier to progress on all these issues.
This paper, published by Business Fights Poverty, CISL and Shift, shows an exciting new momentum towards living wages, coming from businesses, investors and numerous civil society organisations. A vanguard of leading companies is moving beyond statutory minimum wages to ensure that workers are paid enough to achieve financial security. Importantly, this trend is spreading beyond commitments to employees and workers in core operations, to workers in local and global value chains.
However, too many businesses still see living wages as a challenge rather than an opportunity. This paper seeks to change the narrative. It provides a new perspective on what paying living wages offers to companies and demonstrates that living wages generate a wealth of benefits to workers, businesses and society.
Living wages offer companies a suite of business benefits. These wide-ranging benefits can at once improve value chain reliability and quality, boost employee health and well-being, while also contributing to a positive multiplier effect in the local economies in which living wages are paid.
Report recommendations
The paper poses key questions companies and investors should be asking to start to make sense of living wages in relation to their own companies or portfolios:
Key questions for business:
- What is a living wage in the countries, regions and cities in which we operate?
- How can we be certain that we are paying living wages in our core business operations, and advancing wages in our value chain? And how can we implement policies, targets and management systems to close the gaps where they exist?
- What actions are we taking to ensure that our procurement and recruitment practices, and other aspects of our business model, don’t work against the payment of living wages in core operations and value chains?
- Where are the major systemic obstacles to achieving living wages and how can we partner with others to address them?
Key questions for investors:
- How can we better equip our portfolio managers, analysts, and ESG stewardship and research teams to engage with companies on living wages?
- How can we assess company performance and integrate living wages into ratings and modelling frameworks?
- How can we learn from and collaborate with global initiatives to standardise measuring and reporting on living wages?
“I learned a lot about the international work being done in this field – and it is amazing to see that so many larger corporations are pushing it now.”
Professor Jane Wills, Exeter University
“Really fantastic report, great to see all the cases, arguments and data laid out so clearly. I think this is going to be very helpful in engaging investors on the need for / their role in promoting living wages globally.”
Martin Buttle, Head of Good Work, ShareAction
Citing this report
Barford, A., Gilbert, R., Beales, A., Zorila, M., & Nelson, J. 2022. The case for living wages: How paying living wages improves business performance and tackles poverty. Business Fights Poverty, University of Cambridge Institute for Sustainability Leadership & Shift. DOI: 10.17863/CAM.80370