Think Lab on Living Wage

Promoting respect for labour rights is core to the work of the United Nations Global Compact. Respect for workers’ rights and compliance with labour standards are the foundation of decent work. A living wage is an essential component of decent work, and a cornerstone of development, contributing directly to several of the Sustainable Development Goals (SDGs). The UN Global Compact encourages companies to promote and provide a living wage as an essential aspect of decent work to ensure all workers, families and communities can live in dignity. While some companies are sharing ambitious public commitments on ensuring a living wage for all the workers engaged in their operations, many more companies need to take action and put living wage forward as a corporate priority.

Working poverty caused by low wages is a global issue and prevalent in many different industries. According to the International Labour Organization (ILO), more than 630 million workers worldwide — almost one in five, representing 19 per cent of all those employed — did not earn enough to lift themselves and their families out of extreme or moderate poverty in 2019. The COVID-19 pandemic had a significant impact on wages across the world, with two-thirds of countries experiencing downward pressure on the level or growth rate of average wages according to ILO estimates. Low wages are often caused by economic inequalities: they are threatening poverty reduction and hindering the fight against gender discrimination. 

In 2022, the UN Global Compact launched  a series of Think Labs that shaped thought leadership on just transition, transformational governance and living wage. y. Addressing low wages is not only an investment in human capital which can bring a range of returns, it is also part of all businesses’ responsibility to protect and respect human rights as outlined in the UN Guiding Principles on Business and Human Rights (UNGPs). Through the Think Lab, businesses understood how identifying the risk of low pay and acting to mitigate or remediate this risk is one way businesses can align with the UNGPs. Furthermore, as part of their responsibility to conduct human rights due diligence, companies should use their leverage and take steps in their supply chain to promote living wages where low pay is an identified risk.

Ensuring living wages for all workers will accelerate the achievement of a wide range of Sustainable Development Goals (SDGs), in particular, Goal 1: No Poverty and Goal 8: Decent Work and Economic Growth, as well as Goal 5: Gender Equality and Goal 10: Reduced Inequalities. Outcomes from the Think Lab on living wage include:  

  • Identified the needed steps in order to have more companies making the commitment to ensure a living wage for all workers 
  • Shaped and defined business leadership on providing living wage to all employees regardless of their employment status and country of residence
  • Addressed key business challenges and identify good practice across sectors and regions 

From March 2022 to July 2023, the Think Lab built on, leveraged and amplified existing work, expertise and partnerships on living wage, notably on data accessibility as well as key performance indicators and reporting on progress. Strategic thinking and engagement in the Think Lab  helped shape the design of several new tools and resources on living wage:

We encourage all companies to join us on their living wage journey by utilizing these tools and signing up to the living wage Forward Faster targets. 

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