Empowering Workers Towards A Living Wage
A Position Paper

Bama Athreya and Natacha Thys
International Labor Rights Fund
733 15th Street, N.W. # 920
Washington, D.C. 20005
(202) 347-4100
www.laborrights.org

Fall 1999

I. Summary Statement

All workers are entitled to earn a living wage whereby they are able to
steadily improve their standard of living. Workers must be at the
forefront of any movement to demand better wages and working conditions.
Every effort should be made to assist workers in promoting living wage
guidelines at the ILO level, which workers and their representatives, if
any, can then utilize to bargain collectively with their employer.
Activism around the living wage issue must keep in mind the goal of
promoting efforts to bargain collectively. Efforts to establish a
universally applicable economic formula or to measure in concrete dollar
terms the specific living wage amount may be protectionist in impact. More
importantly, such a strategy may create a disincentive for employers to
bargain collectively where the proposed amount differs from the established
formula. We note that unlike other core worker rights standards, there is
no internationally accepted definition of a living wage. We advocate a
living wage strategy geared towards international cooperation to develop
universally acceptable living wage guidelines and towards advocating for
the inclusion of these guidelines in a new ILO convention and in social
clauses tied to enforcement mechanisms.

1II . The Moral Consensus

The moral imperative on employers to pay workers a living wage has long
been acknowledged by the world community. In 1905, Henry Ford took the
unprecedented decision to raise his workers' wages to $5 per day. Ford,
the pioneer of modern mass production techniques, reasoned that mass
production would never be profitable unless mass numbers of people could
afford to buy what was being produced. He raised wages to $5 per day to
enable workers to buy the Model-T cars they were producing.

Unfortunately, since Ford's time manufacturers have shifted production to
low-wage countries, creating a system where more and more goods are being
produced, but less and less people can afford to buy them. This has
created a dangerous imbalance that has already contributed to a crisis in
Asia, as inflation has left many "working poor" unable to buy even food or
other basic life necessities.

Workers must be able not only to meet their basic needs but to steadily
improve their living conditions. This is a moral position, and a pragmatic
one as well. All human beings have certain economic rights: to food,
shelter, medicine, education. Additionally, the global economy cannot
sustain itself indefinitely on a shrinking base of Western consumers.
Workers in the South must be able to steadily improve their standard of
living in order to fuel the demand on which global trade is based. This is
not to suggest that a living wage should be premised on increased consumer
demand, but to acknowledge the economic reasons underlying a living wage.
The primary justification for a living wage should be to allow workers to
meet their basic needs and improve their standards of living as a moral and
economic right.

III. Definitions of A Living Wage

In recent years many sweatshop activists have argued for the rights of
garment workers worldwide to earn a living wage, but their demands have
suffered from a lack of clear definition, and from a narrow focus of
developing economic frameworks that do little to "bring up the bottom." We
advocate assisting workers and their representatives first and foremost to
bargain collectively, and next to promote living wage guidelines at the ILO
level, rather than unilaterally creating specific economic formulae to
determine basic needs.

The most broadly accepted language on this subject is contained in the
Universal Declaration of Human Rights, which states, "Everyone who works
has the right to just and favourable remuneration ensuring for himself and
his family an existence worthy of human dignity, and supplemented, if
necessary, by other means of social protection." This definition, however,
does not provide factors which workers can utilize to bargain with their
employer.

In 1928, the ILO ratified Convention No. 26 which established criteria
for determining minimum wages. The convention provides the following
guidance on the establishment of national minimum wages:

"(1) before the machinery is applied in a trade or part of trade,
representatives of the employers and workers concerned, including
representatives of their respective organisations, if any, shall be
consulted as well as any other persons, being specially qualified for the
purpose by their trade or functions, whom the competent authority deems it
expedient to consult; (2) the employers and workers concerned shall be
associated in the operation of the machinery, in such manner and to such
extent, but in any case in equal numbers and on equal terms, as may be
determined by national laws or regulations; (3) minimum rates of wages
which have been fixed shall be binding on the employers and workers
concerned so as not to be subject to abatement by them by individual
agreement, nor, except with general or particular authorisation of the
competent authority, by collective agreement."

It is noteworthy that the early ILO delegations who developed this
convention did not see a need to include language referring to workers'
basic needs into its text (the ILO charter's preamble, however, does refer
to the principle of a living wage).

The ILO revisited the issue of criteria for determining minimum wages in
1970. ILO Convention No. 131, adopted that year, listed the following
criteria for measurement:

"The elements to be taken into consideration in determining the level of
minimum wages shall, so far as possible and appropriate in relation to
national practice and conditions, include (a) the needs of workers and
their families, taking into account the general level of wages in the
country, the cost of living, social security benefits, and the relative
living standards of other social groups; (b) economic factors, including
the requirements of economic development, levels of productivity and the
desirability of attaining and maintaining a high level of employment."

This language apart, the ILO has never determined criteria with regards to
a living wage. Convention No. 131 does, however, provide a basic framework
which can be applied to living wage criteria. Significantly, it notes the
importance of assessing the impact of wage hikes on levels of employment.
This assessment can only be made appropriately by those affected, i.e.,
workers and employers within a given country. This being the case,
international advocates for wage hikes must be particularly careful not to
take on the role of determining or setting wage levels.

IV. Basic Needs Assessments vs. Wage Determination

Given this existing international framework, we question the effectiveness
of deploying activist resources to the task of creating economic formulae
for setting wages worldwide. On the other hand, we fully support activities
simply to establish a baseline of what basic needs in developing countries
are. These efforts have included developing market based surveys and other
indices to determine the actual purchasing power of factory wages. They
have also included examination of existing studies and reports from
developing-world NGOs. This is an important task, for it supports the
moral rationale for promoting living wage campaigns in international fora,
and we hope it will be useful in propelling a fresh consideration of these
questions in the ILO and other international bodies.

We note with somewhat greater caution the project undertaken by some US
advocates to assess exactly how much, in dollar terms, is "enough" for
their brothers and sisters in the South (e.g. the efforts of US university
students to determine wages for workers producing university-logo apparel).
There are several problems with this strategy. First, it will be a
time-consuming effort and no clear, international consensus is likely to be
reached for quite some time. Second and most significantly, workers are
often missing in the development of economic measures. Such workers, while
they have often been the subjects of studies contributing to the debate,
have yet to become full participants on an advocacy level. Lastly,
employers may refuse to bargain over amounts which vary from the
established formula. Once companies have agreed to a specific formula or
amount, they will have no incentive to bargain collectively with their
workers over differing approaches to living wages.

To be sure, few workers in low wage industries are unionized (we estimate
some three percent of workers worldwide in the garment industry belong to
unions). But where independent trade unions exist, even where they do not
have significant representation in the apparel industry, they, rather than
Northern activists ought to take on the role of defining specific wage
needs. Activists who want to focus on the living wage issue ought to do so
in relation to the demands of independent trade unions in producer
countries, and ought to let their determination of sufficient wage levels
be guided by those allies. Simply "consulting" with those allies, or
requesting their input into predetermined studies or formulae, is not
enough. We prefer a consumer-oriented strategy which identifies and
supports campaigns in developing countries to raise minimum wages. We
note, for example, that such campaigns have been developed in countries
such as Mexico and Indonesia in recent years. Where local activists have
defined, and are promoting, a new minimum wage, we suggest that sweatshop
activists in the US may rightly encourage US retailers and their suppliers
to pay that wage, whether or not the government has yet endorsed it. Along
these lines, we note that the ILO itself in Convention No. 26 stated
specifically that mandated minimum wages were intended specifically to
apply to those sectors "in which no agreements exist for the effective
regulation of wages by collective agreement or otherwise . . ." While
collective bargaining agreements negotiated by independent unions may not
yet be prevalent in the garment industry, living wage advocacy should
explicitly support this eventual goal.

We recognize that in certain countries (Burma, China) it may be difficult
to liaise with local advocates who are defining basic needs or promoting
wage increases. However we believe even in such cases it is possible to
solicit and form relationships with indigenous activists. While it may be
more difficult to seek out such individuals, they do exist and need support
and solidarity if they are to have any hope of becoming effective.

Workers themselves may have a somewhat different idea of what is "enough"
than their Northern advocates. We have examined some of the proposed
"market basket" surveys intended to develop indicators of what is "enough."
We have also talked to numerous factory workers in developing countries.
These workers are concerned with being paid higher wages. However, their
concerns extend well beyond mere "bread-and-butter" issues measured by the
market basket surveys. Most of the trade union leaders we have met have
been as concerned with winning recognition from their employers as they
were with increasing their wages. Some of them were willing to accept
existing minimum wages, for the time being, as long as other benefits, both
material and non-material, were put into place. Most importantly they
wanted to establish an ongoing relationship with their employers that would
allow them to revisit and renegotiate wages and terms of employment
repeatedly in future.

V. Enforcement of the Living Wage

Given these concerns, we believe that advocates of a living wage should
assist workers in promoting living wage guidelines at the ILO level,
whereupon, workers and unions can utilize such guidelines to bargain with
their employers for specific amounts. The ILO appears to be entering a new
period of activism, with the recent adoption of a new Fundamental
Declaration on Rights at Work, which makes adherence to core labor
standards binding on all ILO member countries, and this year's adoption of
a new child labor convention. While the road to adoption of a new
convention is a slow and arduous one, it is a particularly worthwhile goal
for US-based activists at this point.

In addition to promoting living wage guidelines at the ILO level, we
advocate efforts to incorporate such guidelines into social clauses linked
to enforcement mechanisms. Without a clear means of holding countries and
companies accountable for their failure to pay a living wage, living wage
guidelines will do little to improve the living conditions of workers. It
is, therefore, crucial to move the living wage debate beyond economic
formulas to the critical issue of enforcing worker rights.

There is no doubt that Northern advocates have a right to demand that
corporations headquartered in their countries abide by certain basic
standards. We also recognize that workers are not waiting for either
governments or Northern advocates to step in and protect them. Workers
everywhere are organizing to demand higher wages and better treatment from
their employers. However, we strongly caution against the use of
unilateral approaches which are not linked to the broader movement of
enforcing worker rights.

It is unlikely that a single country would choose to raise its minimum
wage unilaterally, especially in regions such as central America or
southeast Asia. This is, of course, part of the "race to the bottom"
dynamic whereby countries compete to provide the lowest possible wages in
order to attract foreign investors. Therefore, even countries with minimum
wages often set those wages lower, than might be determined by an open
labor market, in order to attract investment. The obvious danger of a
unilateral approach where a company is forced to pay a determined living
wage or higher wage is that the company may in fact relocate in search of
cheaper labor.

Thus, although we clearly support grassroots campaigns geared toward
demanding higher wages, as well as collective bargaining efforts, both
strategies must be linked to broad, international enforcement mechanisms.
This not only protects the workers fundamental right to organize and
bargain collectively for higher wages, but provides real consequences where
the employer fails to do so.

To date, there is general consensus that worker rights require an
enforcement mechanism which can hold companies directly liable to workers
and force countries to enforce their own labor laws. One method of doing
so favored by ILRF is to incorporate a social clause or worker rights
clause into a regional and/or multilateral trade agreement. As trade is
the catalyst for the global economy, it should be a primary vehicle for
enforcing social norms. In doing so, worker rights are linked to real
enforcement mechanisms whereby countries are penalized through trade
sanctions. Under ILRF's approach, remedies against a company found in
violation of social clause could range from monetary penalties to loss of
market access for products made in violation.

Supporters of the social clause approach generally agree that the social
clause should incorporate what the ILO deems core labor rights. The core
labor rights include: the right to associate (Convention No. 87); the right
to organize and bargain collectively (Convention No. 98); equal employment
opportunity and non-discrimination (Convention Nos. 100 and 111);
prohibition of forced labor (Convention Nos. 29 and 105); and prohibition
of child labor (Convention No. 138).

There has been increased debate in recent years over additional rights
that could be incorporated into a social clause. While most worker rights
advocates would welcome the inclusion of additional rights, it may
ultimately undermine the ability to implement the social clause into a
trade agreement in the foreseeable future. For this reason, we advocate
that the living wage be a right that could be phased into core rights,
starting perhaps first with the incorporation of minimum wages based on ILO
Convention No. 131.

VI. Conclusion

Workers themselves can and should be in the vanguard of any movement to
demand better wages and working conditions. Given that most worker rights
advocates have limited time and resources, how can we best support workers
and their representatives, if any, in promoting a living wage? It seems
like a far easier task to pressure a particular multinational into doubling
its wages than to form a coalition between unions and NGOs to devise living
wage guidelines and to develop methods of enforcing workers' rights at the
multilateral level. However, we believe it is time to take on the latter
task. The tasks before us, then, on the living wage issue are as follows:
to support basic needs research, which workers can then utilize to bargain
collectively for their specific needs; to work together with producer
country trade unions and NGOs on the development of appropriate living wage
guidelines, and to lobby for the inclusion of these guidelines in a new ILO
convention and in social clauses tied to enforcement mechanisms.