Living wages and incomes key to sustainable value chains

Anna Triponel

May 27, 2022
Our key takeaway: Paying living wages and ensuring living incomes for workers throughout the value chain is fundamental to ensuring that other rights—the right to an adequate standard of living, the right to education, the right to health, and beyond—are respected. For this reason, companies and investors are increasingly recognising the importance of committing to paying living wages and incomes, as well as to ensure that purchasing practices do not undercut this. The inclusion of living wages in the European Commission’s proposal for a Corporate Sustainability Due Diligence Directive could set the groundwork for even more companies to commit to paying living wages and incomes as a matter of doing business. 

The European Commission’s proposal for a Directive on corporate sustainability due diligence, adopted on 23 February 2022, recently closed its public consultation period on the proposal. Among the feedback, a group of more than 60 companies, investors and initiatives issued a comment calling on lawmakers to ensure that living wages & incomes are included in final due diligence directive. (You can read all of the feedback that the Commission has received here.)

  • Living wage and living income as a human right: The group welcomes the explicit inclusion of living wages in the current draft directive, in particular the framing of living wages as a human right in line with Article 7 of the International Covenant on Economic, Social and Cultural Rights (ICESCR). Specifically, “the draft Directive states companies are to ensure that “an adequate living wage” is not withheld, including in their supply chains. We, the signatories of this letter, very much welcome the inclusion of living wages in the EU Directive and call for the inclusion of living income as well.” The letter asks lawmakers “not to compromise on the definitions of living wage and income” and to base it on ICESCR Article 7 and the definitions set forth by the Global Living Wage Coalition and the Living Income Community of Practice. It also urges lawmakers “not to follow the example of the German Due Diligence law (Lieferkettengesetz), which redefined living wages as ‘legal minimum wages’ - which are often not living wages.”
  • Living wage and income are crucial for fighting poverty and inequality”: The letter underscores the important role of living wages and living incomes in ensuring decent work and fair purchasing practices across all sectors: “Living incomes are key to remediate poverty among vulnerable groups of self-employed such as smallholder farmers or artisanal miners. Living wage and income can help break the cycle of poverty, build healthy local economies and encourage equality in societies.”
  • “Living wage and income are good for business”: The group sees a clear business case for paying living wages and ensuring living incomes: “They help retain a stable, skilled work force and a productive, resilient value chain. Companies committed to living wage and income are better positioned to respect human rights in their own operations and their supply chain, meeting the expectations of the EU Directive.” Signatories further point out that more and more companies are  making a commitment to living wages and incomes in their own operations and supply chains. 

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