A decision by the ILO’s Governing Body opens the way for new work by the ILO on estimating and operationalizing living wages, and on engaging with living wage initiatives.

The International Labour Organization (ILO) has reached an agreement on the issue of the living wage. The agreement, reached during a Meeting of Experts on wage policies , in February, was endorsed by the ILO’s Governing Body  at their session earlier this month.

The experts agreed that decent wages are central to economic and social development and to advance social justice. They also play an essential role in reducing poverty and inequality and ensuring a decent and dignified life.

According to the experts, “the ILO denotes that the concept of a living wage is:

• 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.”

The agreement says that the estimation of living wages should follow a number of principles, including the usage of evidence-based methodologies and robust data, consultations with workers’ and employers’ organizations, transparency, public availability, and the consideration of regional and local contexts and socio-economic and cultural realities.

The operationalization of the concept of a living wage within the broader wage-setting process should be evidence-based and take into account the ILO key principles of wage-setting. The operationalization includes strengthening social dialogue and collective bargaining and empowering wage-setting institutions, promoting incremental progression from minimum wages to living wages, ensuring national and/or local ownership, and recognizing the role of the State. The conclusions also recall that, “the needs of workers and their families and economic factors are the two pillars of wage-setting processes”.

“Living wages should not be a one-size-fits-all approach and should reflect local or regional differences within countries,” the document outlining details of the living wage agreement says, adding that a sustainable strategy to promote living wages, “should go beyond the realm of wage-setting mechanisms alone and include a broader consideration of factors.” There has been a positive long-term global trend in average wages. Yet millions of workers worldwide – in both the formal and informal economies – continue to earn very low wages compared to the cost of living and live in poverty. These workers and their families are unable to afford healthy food, decent housing, medical care or schooling for their children.