Collective bargaining is central to living wages

This week is Living Wage Week in the UK, and pay has become a key issue for the British trade union movement because we have suffered the longest sustained fall in real wages since records began (which, unlike so many freak weather headlines, means the 19th century!).

In Britain, the TUC marched through London last month under the slogan ‘Britain needs a pay rise’. Next week, trade union leaders from the G20 countries will be in Brisbane, Australia to tell world leaders that ‘the world needs a pay rise’ too.

It’s obviously even more desperate in developing countries. In Bangladesh and Cambodia, textile workers’ wages are major issues not just for workers, but for politicians and the retailers whose supply chains begin there. And as Sabita mentioned in her blog on Monday, earlier this year, a group of eight multinational corporations wrote publicly to urge the Cambodian government to increase the minimum wage.

Living wages – part of the ETI base code - are obviously important for workers, but also for their families and their communities. As we’ve found in the UK, low wages mean further costs to the government – and lower tax revenue to meet those costs – so living wages are important for whole societies.

Earlier this year, a group of eight multinational corporations wrote publicly to urge the Cambodian government to increase the minimum wage.

That sounds generous, but it wouldn’t have happened without pressure from unions locally and globally. And it’s an object lesson in how living wages depend on workers being free to join independent trade unions, and those unions being free to bargain collectively on their behalf with their employers.

A lot of energy is expended in academic discussions about what level to set the living wage at. As a benchmark, that’s useful information. In the UK, research this week showed that there are 5 million British workers paid less than a living wage.

But if you actually want to know what a living wage is for your factory, your company, your industry, then there’s no better way than asking the workforce and their union (asking workers who aren’t in a union often gets you the answer they think you want to hear, rather than the one they want to give.)

And unions are key, also, to affordability. We know that achieving a living wage isn’t just a matter of waving a corporate wand. There are questions about productivity, about timescales, about hours of work. Those are issues that employers can negotiate with unions, ensuring a fair solution for everyone.

Whether your supply chain runs around the world, or starts and finishes in the UK, though, you won’t be able to avoid the living wage debate. Pay is back on the agenda as the best way to improve people’s standards of living, reduce inequality and restore growth.

ETI's blog covers issues at the intersection of business, news and ethical trade. We welcome a range of insights and opinions from our guest bloggers, though don't necessarily agree with everything they say.