The living wage differs from statutory minimum wages in that it is calculated according to workers’ needs, not the demands of the labour market.
A living wage ensures that working people can earn enough to meet all their daily expenses and have some discretionary income left over to invest in their own or their children’s future.
The past four decades have seen a dramatic increase in the share of global wealth going to the most powerful corporations, their bosses and their owners. As labour’s share of national income has declined around the world, there has been a parallel rise in the number of workers who find themselves trapped in poverty despite having a job – the so-called ‘working poor’.
Millions of low paid workers around the globe spend their lives toiling in mines, factories, fields and offices, yet never manage to earn enough to lift themselves or their children out of poverty. The situation is especially stark for women and migrant workers, who face particular challenges in organising and demanding fair pay.
War on Want has long called for all workers to be paid the living wage appropriate to their economic context as a basic right, not a voluntary extra over and above the statutory minimum set down by governments or national wage boards. The fight for all workers to enjoy decent terms and conditions is a central pillar of War on Want’s work for social justice.
5 reasons for a living wage
A basic human right
It is the only way to ensure that all workers can enjoy the right to an adequate standard of living. If a worker does not receive a living wage for their labour, then they and their families are deprived of the possibility of obtaining many of the essential elements that contribute to a decent life: adequate housing, good nutrition, health, rest and access to education and culture. They are deprived of the freedom to make choices about their own lives.
Boosting local economies
Many opponents of a living wage argue that the imposition of fixed living wage rates would harm the poor by reducing the number of jobs available. Yet there is evidence that increasing wages for the lowest paid workers can actually boost the economy, rather than damage it. Low paid workers are generally able to save very little, if any, of their earnings, so any money that they earn is circulated straight back into the economy.
Low paid workers, who are never able to earn enough to meet their basic needs, are caught in a poverty trap where the combination of insecurity, low pay and long working hours prevents them from participating fully in family and community life. Low pay also traps children of poor families into a cycle of poverty that is passed down through generations. Demanding that all employers provide a living wage to all their workers is one way of challenging this cycle and helping families to break free from the poverty trap.
Benefits to employers
There is a growing body of evidence to support a business case for paying a living wage. Numerous research studies into ‘living wage workplaces’ have shown that the costs of paying a living wage are offset by benefits brought to the companies concerned. These benefits include reductions in absenteeism, better staff retention rates, improved productivity, improved staff motivation and loyalty to the company, the ability to attract better staff, savings on training costs, more stable, reliable services and enhancements to the organisation’s reputation.
In the years since crisis hit the global economic system, governments around the world have adopted severe austerity programmes based on drastic cuts in public services and the welfare state. These cuts have had a direct impact on the lives of the working poor, further limiting their access to housing, health care, education, legal support and nutrition. The introduction of a comprehensive living wage is a way of reducing public spending without further reducing the quality of life for millions of families.