Blog: Leonie BarrieLiving wage debate continues...

Leonie Barrie | 16 October 2009

For many retailers, the lack of real evidence as to what a living wage constitutes means they continue to refer to a minimum wage in their code of conducts, with only a cursory glance towards the alternative.

UK supermarket retailer Tesco, for example, told the recent Let’s Clean Up Fashion report: “There has long been contention about what this attempt to define a ‘living wage’ means in practice...The lack of a commonly-understood definition means we don’t find it practicable to use the term in day-to-day work.”

Until now, that is. The Asia Floor Wage (AFW) campaign has, for the first time put a figure on what it believes garment workers need to earn if they and their families are to meet basic needs for nutritious food, water, shelter, clothing, education, healthcare and transport as well as providing for a discretionary income.

It doesn’t seem a lot to ask does it?

Well detractors have gone straight to the numbers, arguing that paying the equivalent of a $475 a month minimum wage throughout Asia will decimate the garment industries in countries like Bangladesh, which is one – if not the – world’s cheapest producers.

The figure of $475 is not a literal currency exchange; it is based on the World Bank's Purchasing Power Parity, which was used to work out the wage needed to allow workers to purchase the same set of goods and services that a US consumer can get for $475.

But in local currency terms it still works out at a big increase on the current minimum wages in the six countries taking part in the campaign – Bangladesh, China, India, Indonesia, Sri Lanka and Thailand. In Bangladesh it comes in at more than six times the value of the current minimum wage, and is 2.4 and 1.6 times higher than current minimum wage levels in China and India respectively.

Supporters of the AFW, however, are well aware that that setting out clear criteria for how a minimum wage should be calculated simply gets them over one more obstacle in their campaign for better take-home pay, and is nowhere near the end of the debate. It will also be interesting to see if any retailers heed their pleas to foot the bill from their own profits rather than back-loading the cost onto suppliers.

But setting a living wage level has been the holy grail of what campaigners have been looking for, and while taking discussions to the next level may be all it achieves, that that at least will be a good thing.


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