Minimum wage
The right to enjoy just and favourable
working conditions recognises that the State must protect the right to fair
remuneration that must also be enough to provide workers and their families
with a decent standard of living. The minimum wage should be enough to provide
a worker and their family with adequate food, clothing and housing. The ILO
states that minimum wages should, for example, take into account issues such as
the cost of living and the needs of workers and their families.
Implications for business
Companies can have a significant impact on
the right to enjoy just and favourable working conditions, including the right
to fair remuneration. Companies should at the very least comply with government
minimum wage legislation. Companies could move to developing a system whereby
it and its sub-contractors pay a living wage.
The following examples were identified
through background research:
- Novartis is one of a handful of companies
that has committed to paying a living wage to all of its direct employees
around the world. Since 2004, Novartis has adjusted the salaries of
employees in various countries in line with the living wage.
- In Brazil, the minimum wage has risen
around 46% since President Luiz Inacio Lula da Silva came to power in 2003.
An increase in January 2009 is thought to directly benefit 42.1 million
Brazilians.
- NGO MakeITfair reported in March 2009
that workers in electronics factories that produce games consoles in China are increasingly finding that the payment of minimum wages is standard. However, they
note that, as this wage is low, workers are often forced to work up to 11
hours a day for six days a week to earn enough to live.
- In Russia, approximately 14% of the
population have income levels below the official subsistence minimum.
- In the Philippines, violations of minimum
wage standards are common, as is the practice of using contract employees
to avoid payment of required benefits, including in the Export Processing
Zones. During 2007 the Department of Labour and Employment established
that 18% of the 23,313 commercial establishments assessed by them were not
in compliance with the minimum wage laws.
Identifying the dilemma
How does a company respect the right to an
adequate standard of living for employees when operating in a country where the
legally mandated minimum wage fails to do so and low wages and rising food
prices are impacting on the purchasing power of the urban workforce?
The following have been identified as possible components
of this dilemma:
- Minimum wage vs. living wage
- No legally mandated minimum wage
- National minimum wage not enforced
- Increased living costs
- Business competitiveness
- Variation in cost of living within a
country e.g. capital cities
- Contract labour
Maplecroft in partnership with the United Nations Global Compact