After starting his job as a lab assistant at a Michelin Group plant in Bahia, Brazil, Marcus Vinicius Martins Lavrador could afford to buy a car, which proved to be a boon to his family’s standard of living.
“When you earn a living wage, your family’s quality of life improves,” he said.
Several thousand miles away in Chennai, India, Michelin lab technician Sarasu Dharumanm cares for two children as well as her elderly parents.
With her pay, she is pleased that she can send her children to a better school than the one she attended.
Their benefits stem from Michelin’s focused effort to provide a living wage to all its workers, the company said.
“To introduce a living wage in an international group, the first step is simple: decide to do it,” said Jean-Claude Pats, formerly Chief People Officer at Michelin and now Executive Vice President Automotive Global Brands. “We decided to implement it realistically and also rapidly.”
Jean-Claude Pats, Michelin’s Executive Vice President Automotive Global Brands, is an advocate for its living wage initiative.
The French equipment and tire manufacturer began working on its living wage program in 2019, with the assistance and encouragement of the United Nations Global Compact.
Michelin participated in a working group initiated by the Global Compact to draft a ‘Call to Action’ document, containing recommendations and practical advice for the company’s living wage initiative.
Michelin made its decision in July 2021 to guarantee decent pay to all its employees worldwide – 130,000 people, including those on French soil.
Sarasu Dharumanm, a lab technician for Michelin in Chennai, India, said earning a living wage allows her children to attend a better school than she did.
The commonly accepted definition of a living wage is an income sufficient to ensure a decent standard of living for a worker and their family. It covers basic needs of food, water, housing, education, health care, transportation and clothing as well as the creation of precautionary savings.
Unlike a minimum wage, which is often set without considering real living conditions, a living wage is based on the local cost of living.
A living wage can represent “more than double the legal minimum required in some countries,” said Frédéric Pinglot, Vice President of Human Rights at Schneider Electric, another French company that has instituted a living wage program for its workers.
Michelin, Schneider Electric and L'Oréal – three major multinational French companies — pay all their employees a living wage and are working to extend living wages to workers throughout their supply chains.
“Most countries in the world have minimum wages set,” said Griet Cattaert, head of Labour Rights at the Global Compact. “But what we see is that these minimum wages are too low. They don’t allow a decent standard of living.”
A living wage is one of the pillars of the Global Compact Forward Faster initiative, which challenges businesses to raise their ambition levels by taking tangible, accountable actions in five key areas — living wage, gender equality, climate, water and sustainable finance.
These are areas where the private sector is best positioned to accelerate progress across all 17 Sustainable Development Goals.
Through Forward Faster, companies commit to and report on two living wage targets: the first is for 100 per cent of employees across the organization to earn a living wage by 2030, and the second establishes a joint action plan with contractors, supply chain partners and other key stakeholders to work towards achieving living wages and/or living incomes with measurable and time-bound milestones.
Manoj Kumar Suqunakar, who works as an operator at Michelin’s plant in Chennai, India, said earning a living wage helps put his mind at rest.
At Schneider Electric, an energy and technology company with some 150,000 employees around the world, the implementation of the living wage was carried out in stages, starting in 2018.
The company has been implementing a global annual process to analyze wage levels and employment practices against local living wage standards.
"We started with a limited number of countries,” said Pinglot. “The idea was to understand how it worked, what the implications and costs were.”
In 2019 and 2020, Schneider Electric extended the living wage scope and applied it to 100 per cent of its permanent contracts of more than one year, which represented around 90 per cent of employees.
In 2021, it sought to extend living wages to its strategic suppliers, which comprise 800 companies.
At L'Oréal, the commitment to a living wage dates back to 2020, said Maxime Belingheri, human rights manager at the cosmetics and personal care products giant, which has more than 90,000 employees globally.
L'Oréal updates salaries annually except in countries affected by hyperinflation, such as Argentina, where the update is quarterly. By 2030, 100 per cent of its strategic suppliers will be expected to pay a living wage, Belingheri said.
Schneider Electric has defined three levels of a decent wage – basic, intermediate and advanced. All of its strategic suppliers, which represent 800 companies out of 6,000 suppliers, must reach the first level and have been asked to commit to working on a decent wage.
“There is no sanction. Our strategy is not to impose but to convince. The objective is first to raise awareness,” said Pinglot.
Pinglot said the competitiveness of companies can be a sticking point.
"We are not the only customer of our suppliers. If they pay living wages, they will have to pass it on to their prices. This must therefore be done gradually,” he said.
“Governments and unions must support the process,” he added.
Living wages have been shown to improve employees' quality of life, reduce the gender pay gap, boost productivity and commitment to work, reduce dependence on public aid, strengthen purchasing power, stimulate the local economy and bolster the image of companies, attracting talent and customer confidence.
“By paying good wages, we also ensure that our people stay and continue to work for Michelin,” said Florent Charussade, plant director at Chennai.
Manoj Kumar Suqunakar, an operator at Michelin’s Chennai plant, said: “My financial situation has improved considerably.
“My mind is more at rest now. I feel relaxed because my standard of living is getting better. I’m happy about that.”
