Socio-economic Impact of Paying Living Wages:
To Build an Economy that is Resilient
11:30 - 13:00 (Bangkok time, GMT+7), 28 May 2021
Organised by Oxfam Germany and Oxfam India
Last 10 years have been the most profitable for the multinational corporations across the globe. Statistics suggest that the fortune 500 firms altogether have increased their profits by 156% from $820bn in 2009 to $2.1tn in 20192. Outside of the Europe and the United States- in developing countries such as Nigeria or in India some of the companies have generated an increasing portion of global corporate profits over the past decade, and they wield immense power in their countries of origin.3
Most of these profits however, were not reinvested in company’s own productive capabilities nor did they went to the government (in the form of tax pay outs) wherein they could have been invested in social protection. Instead these went to the wealthy shareholders following the conventional “shareholder” centric model, which persists even when the pandemic is ongoing. Oxfam analysis has found that the world’s largest companies’ donations during COVID19 on average amounted to 0.32% of operating income for 2019 and thus do not constitute an adequate contribution considering the financial costs of this crisis and the extent of corporate profits 4
Stagnant wages and poor working conditions thus continue to be the reality of those working in the upstream of the supply chain. The worst affected in the supply chains are the sectors which are labour intensive and overrepresented by women workforce especially the ones which draws its raw material from agricultural and allied sectors. This was largely because of the flexible nature of the supply chains because of lack of transparency which facilitated pushing down the risks and the costs towards the most vulnerable actors of their supply chains. There was last minute cancellation of orders, wage thefts, job losses that were reported globally- Hunger and poverty dominated! About 80% of workers in informal sector lost job and 63% relied on two meals per day in India. 5
Wage poverty in the upstream of the supply chain is largely because majority of the workers in supply chains even before pandemic hit were earning daily wages which closer to the minimum wages, thus leaving them with no cushion for safety and security during the unforeseen times such as Covid. The work poverty and perpetual struggle for survival on daily wages being insufficient to survive takes away their power to negotiate better and pulls them further into several elements which are against the fundamentals of “Decent work”.
A study conducted by Oxfam across the 12 food supply chains in several sourcing countries reveals that usually the workers/ small holder at the upstream of the supply chains receiver lesser than <6.5% percent of the end consumer price, and, that significant share of the rest (slightly more than 80 %) goes to the accounts of the big retailers and the suppliers in sourcing destinations.6 It also points that it would need supermarkets and other supply chain actors to invest only a marginal amount to close the gap between the current and living incomes / wages levels (in comparison to the end consumer price). The amount was determined to be between 1% to 5% (without increasing the end consumer price) across the basket of 12 commodities that were studied. This is pretty doable and needs only the intent as the discrepancy in the economic impacts of COVID-19 is no coincidence. The extent of violation and chaos currently is sheerly a result of an economic model that has historically prioritises profits for the wealthy, while encashing on the vulnerabilities of many.
The proposed Panel will thus discuss and deliberate on the following
The impact of Covid 19 on the lives and livelihoods in across the different supply chains in Asia- such as the supply chains of India (tea and sugar, Leather and textiles), Thailand (Shrimp supply chain), Rubber (Philippines) and what is the gaps that needs to be closed from the latest researches/ work done by Civil society in this regard.
Share case studies/ lessons from across the world wherein companies have moved up in making commitments for payment of living wages.
Discuss on who will close the Gap and How?
3 Profits before Taxes Oxfam Report
4 Profits before taxes- Oxfam Report
6 Ripe for Change – Oxfam Report 2019
The session will be at the backdrop of COVID19 pandemic and how it has shattered many of central assumptions for sustainability. It will focus on worker’s rights to wages and bring forth the conceptions and ever increasing importance of “living wage” in such pandemic times of crisis. The session will have range of Speakers from across countries who will share the impact of the pandemic on informal workers in the supply chains and how ensuring “living age” is one of most important mitigation measures. The session will exacerbate how the payment of Living wages could have built an economy that would have been resilient enough to sustain shocks such as Covid-19.1
The session will be mainly to influence policy makers, stakeholders working on supply chain and business and human rights issues, CSOs, Industry representatives and youths who are considered as active citizens
1 India has recently concluded a living wage study in the Assam (Tea sector) with inputs from about 5000 workers
The key objectives of this session are to:
Strengthen the rationale and narrative on “Living Wage” in the context of informal workers and global supply chains and facilitate a discussion and debate amongst policy makers, stakeholders working in supply chains.
Whether ‘Living Wage” has the ability to mitigate the pandemic situation and its impact on informal workers along the global supply chain
What will be immediate and feasible measures in order to implement the “Living wage” across supply chains?
What will be role of various stakeholders in implementing the conception of “Living wage” for supply chain workers?
Additional background documents