Understand living wages

Contents

Every worker has the right to a standard of living adequate for their own health and well-being and for that of their family*. Workers’ typical weekly wages should meet their basic needs and provide some discretionary income.**

*Universal Declaration of Human Rights – Article 25: Right to an adequate standard of living.
**ETI Base Code – Clause 5: Living wages are paid.

But for garment supply chain workers, wage levels usually fall well below this threshold. Many brands and retailers audit their suppliers to check that workers are paid the legal minimum wage in the production country. In most cases, there is a significant gap between this legal minimum and a living wage. The living wage gap leaves millions of workers locked in poverty and poses a serious risk to their health and well-being. 

The wage level that is necessary to afford a decent standard of living for workers and their families, taking into account the country circumstances and calculated for the work performed during the normal hours of work;

Calculated in accordance with the ILO’s principles of estimating the living wage;

To be achieved through the wage-setting process in line with ILO principles on wage setting.

Estimating living wages

This list offers a range of living wage benchmarks and estimates to help assess wage gaps and guide responsible costing. Sources vary in coverage, methodology, and access—some are free, others require payment. 

Available living wage estimates and benchmarks 

Several organisations provide living wage figures that can be used to assess wage gaps and inform costing strategies. These vary in methodology, coverage, and accessibility:

Offers benchmarks for 50 countries using the full Anker methodology, which includes comprehensive primary data collection and stakeholder engagement.
An additional 100 benchmarks are available using the Anker Reference Value methodology, which applies quantitative modelling to estimate living wages.
This is a widely used methodology in the industry and covers countries such as Bangladesh, Cambodia, China, India, Indonesia, Morocco, Pakistan, Sri Lanka, Romania, Turkey, and Vietnam.

Provides living wage estimates for 165 countries. As of 1 May 2024, many benchmarks have become partially free for all countries and regions. Full access to the global or regional databases may require payment.

Offers regional benchmarks focused on garment-producing countries in Asia.

Aggregates benchmarks from various sources. Some references may point to Fair Wage Network data, which requires payment.

Provides a living wage database with access based on company size and subscription level.

Assess the living wage gap

Start by collecting data on the actual wages paid to workers in your supply chain. Focus on the gap between the wages of the lowest-paid workers (for regular working hours) and a credible living wage estimate.

Collect data on current wages 

Wage levels vary across roles and employment types within a manufacturing unit. To get a clear picture, you may need to account for both fixed and variable pay components. Consider collecting the following data points*:

  • Number of employees, broken down by gender, job category, role/title, and employment status (permanent, temporary, or agency).
  • Type and value of salary components: regular wages, overtime pay, bonuses, etc.
  • Basic wage for regular working hours, excluding overtime, by job role or category.
  • Allowances (e.g. housing) and regular bonuses (e.g. statutory 13th month salary) that are consistently paid.
  • Variable pay such as productivity or piece-rate bonuses that workers regularly earn and rely on.
  • Deductions for taxes, social insurance, and entitlements like parental leave.

This level of detail allows for disaggregation, helping you identify where wage risks are greatest and where to prioritise action. It also supports tailored strategies to improve workers’ income—such as addressing gender pay gaps or access to social benefits.

Tools to support data collection:

*See Appendix 15.1, page 277 of the Anker methodology for a full list of wage components to include.

Analyse the gap

Once you’ve collected wage data, compare it to living wage benchmarks to calculate the gap—especially for the lowest-paid workers. You can do this manually or with the help of tools:

  • Wage Indicator tool (free) – Enter actual wages and compare them with country- and region-specific benchmarks. Automatically calculates the wage gap.
  • Fair Wear Wage Ladder (free) – Input actual wages and compare them with multiple benchmarks (GLWC, AFWA, trade union estimates, minimum wage). Generates a clear visual output.
  • The FLA Fair Compensation Dashboard(paid) – Analyse average wages, compare them with benchmarks from 30+ countries, and track progress over time.
  • IDH’s Salary Matrix for Living Wages(free) – Compare actual wage data with living wage benchmarks.

Reduce the gap

Use your assessment of wage gaps to build an action plan. Focus on the largest gaps first and where you have long-term supplier relationships. Refer to the process map (add link) on the previous page and the costing methodologies explained earlier (add link).

In this video: Sreeranga Rajan, Founder and CEO of Dibella, India

Sreeranga shares how Dibella works with brands to improve wages:

  • Long-term partnerships built on shared values are essential for living wage projects.
  • Dibella created an open-costing structure with each brand, carefully calculating and ringfencing costs related to farmers and workers.
  • A global living wage benchmark was available, but they validated the target wage through worker surveys and engagement with local NGOs and government.
  • They calculated the gap between the lowest-paid worker and the living wage target.
  • The upcharge per item was calculated based on the standard minute value. 
  • This amount is currently paid to workers as a bonus.
  • The goal is for enough brands to commit, enabling a shift to structural wage increases.

Brands’ purchasing practices have direct consequences on the lives of workers and farmers. Start with small improvements—and build from there.

Sreeranga Rajan
Founder and CEO of Dibella, India

Support collective bargaining and freedom of association 

Free and fair collective bargaining allows workers to voice their needs and advocate for better wages and working conditions. It depends on freedom of association—the right of workers to join or form trade unions of their own choosing.

Although freedom of association is protected under the Universal Declaration of Human Rights, it remains restricted in many countries and workplaces.

Responsible businesses have a role to play in actively supporting these rights. In the context of purchasing practices, you can do this by prioritising sourcing from countries and companies that respect freedom of association and where wages are a product of collective bargaining (through mechanisms that meet ILO standards).

Commit long-term

An essential part of supporting improved wages for workers is commitment to sustain the sourcing relationship long-term. A significant risk for suppliers and workers is that brands agree to higher wages, then shift sourcing to cheaper, less responsible suppliers.

You must align your global sourcing strategy with your commitment to human rights, freedom of association, and closing the living wage gap. This means:

  • Focusing on long-term business relationships and legally binding agreements, where these can enable improvements for workers. 
  • Avoiding shifts in sourcing away from current suppliers whilst increasing sourcing from countries or companies where fundamental human rights, such as freedom of association, are less well protected.
  • Monitoring long-term implementation of your responsibility to close living wage gaps across your supply base.