Establishing Fair Compensation: Living Wages, Dignity, and Decent Work in a Transforming Global Economy
Chair(s): Paulien Osse (WageIndicator Foundation, Netherlands, The)
Discussant(s): Damian Grimshaw (King's College London)
As the world grapples with uneven employment recovery following the COVID-19 pandemic and subsequent inflationary pressures, the concept of living wage has (re)emerged as a critical tool for establishing decent wages. Contextualised research, such as from the UK, has shown that living wage payments can have a significant effect on worker well-being, reduced health issues and enhanced social status (Seubert, Hopfgartner & Glaser, 2021). Other studies point to how living wages could serve as an economic stimulus by increasing consumer spending, reducing poverty, and enhancing workforce stability (Barford et al., 2022).
Even though the concept of living wages is not new for scholars nor practitioners, there is a lack of scientific and policy agreement on defining living wage levels, as well as a lack of research on what the effects of the implementation of living wages can be on a country’s wage distribution and poverty levels. The papers in this session aim to make a start in addressing these gaps.
With the International Labour Organisation (ILO) tabling the topic in February 2024 during a meeting of experts, with principles adopted by the Governing Body in March (ILO, 2024), living wage is an important concept to take into account in regulating for decent work. The ILO’s conceptualisation touches upon the need for estimates that reflect local or regional differences within countries. Locally specific living wage estimates ensure accuracy and legitimacy from the point of view of local stakeholders such as workers and bargaining partners. With this, there is a need for more research on both the local applicability of the living wage concept as well as addressing a global way of measuring income adequacy and coming up with robust and comparable living wage estimates across the world consistently, as such that living wages can be used as a policy tool.
In conceptualising living wages, the ILO, scholars and practitioners have looked at how workers can earn a wage sufficient to afford a decent standard of living, including basic needs such as food, housing, healthcare, and education (ILO, 2024; Guzi et al. 2024). A living wage is aimed to reduce poverty and inequality by providing a wage floor that reflects local economic conditions and cost of living. Importantly, the conceptualisation of a living wage also emphasizes the importance of collective bargaining and social dialogue and role of social partners in setting wages that are fair (ILO, 2024).
This session includes five diverse papers that explore the conceptual tension between the local and global in defining, operationalizing, measuring and implementing living wages. We also broaden the discussion to: ‘a living wage for whom?’.
The first paper, by Guzi, Kahanec, Holičková and Amanquarnor introduces a novel, harmonized measure of income adequacy - the living wage - as calculated by WageIndicator Foundation, calculated for over 170 countries and 2700 regions. The authors demonstrate that the living wage is a superior indicator of income adequacy compared to existing measures such as minimum and adequate wages by identifying the critical “material deprivation point” through threshold regression. In the second paper, Meyer presents the South African National Living Wage study, which uses a unique, people-centred methodology to determine living wage levels. This approach maps working people's own assessments of their quality of life against their income, and highlights its cultural appropriateness in South Africa. The third paper, by Ooft, Sobhie and Grift, explores the standard of living and household poverty in Suriname by combining a literature review and cost-of-living data from the WageIndicator Foundation. The study identifies significant geographic disparities in household welfare and indicates that households spend a substantial proportion of their income on housing, food, and transportation. The fourth paper by Güler, examines the relationship between Türkiye's minimum wage levels and cost of living, analyzing whether minimum wage policies ensure a decent standard of living for workers. The study emphasises the need for social dialogue and economic justice in setting minimum wages. The fifth and final paper by Kahancová and Arets introduces the concept of a Living Tariff, inspired by the Living Wage, that addresses the unique challenges faced by gig workers and self employed workers. The Living Tariff addresses social security, pension, insurances, and gives additional space for more insight in occupational related expenses and waiting time.
This session, moderated by Paulien Osse, co-founder and global lead Living Wages at WageIndicator, with Prof. Dr. Damian Grimshaw of King’s College in London as discussant, aims to provide a comprehensive exploration of the living wage concept, its theoretical underpinnings, and its practical applications in various contexts. It demonstrates how living wages can be used to foster inclusive economic growth, strengthen collective bargaining, improve minimum wages and discusses the need for inclusive wage floors beyond traditional employment to include gig workers and freelancers.
Presentations of the Special Session
Global Benchmarks for Decent Living: Measuring and Validating the Living Wage Against Minimum Wage and Other Adequacy Standards
Martin Guzi1, Martin Kahanec2, Nina Holičková3, Nii Ashia Amanquarnor4
1Masaryk University and Central European Labour Studies Institute - CELSI, 2Central European University and Central European Labour Studies Institute - CELSI, 3Central European Labour Studies Institute - CELSI, 4WageIndicator Foundation
This study introduces a novel, harmonized measure of income adequacy. Using a robust empirical methodology, we demonstrate that the living wage is a superior indicator of income adequacy compared to existing measures such as minimum wages. The empirical framework is rooted in the “decent living threshold”, where income below this level reduces the risk of unmet basic needs, while additional income above it has less effect. This study models the ratio of the average wage to various wage benchmarks — living wage, minimum wage, and adequate wage — across 38 countries. The critical "material deprivation point" is identified through threshold regression by examining the wage level where material deprivation significantly decreases. Results show that living wages align more closely with the threshold for a minimum income sufficient for a decent standard of living, providing a robust tool for policymakers, researchers, employers and social partners to evaluate and improve wage policies.
Calculating Living Wage Levels via Quality of Life Indicators
Ines Meyer1, Imaan Mohamed2
1University of Cape Town, 2University of Cape Towm
The South African National Living Wage Study uses a unique, people-centred methodology to determine living wage levels. It maps working people's own assessments of their quality of life against their income. This map reveals the living wage as the income level at which individuals begin to have choices about important aspects of their lives and thus no longer remain trapped in their circumstances. Using the 2022, 2023 and 2024 results of the study (N = around 2,000 response sets per year), I show how this approach directly assesses how decent a life different working incomes enable, the breadth of information it reveals and how the data can inform wage setting. Finally, I highlight the cultural appropriateness of this approach in South Africa, whose development agenda is shaped by institutionalised bottom-up participatory mechanisms.
Exploring Living Standards and Poverty in Suriname through Insights in Cost of Living and Wages
Tesora Ooft1, Rosita Sobhie1, Yolanda Grift2
1Anton de Kom University of Suriname, 2Utrecht University
Improving living standards and reducing poverty in Suriname requires a clear understanding of the cost of living and the relationship with wage distribution. This paper explores the standard of living and household poverty in Suriname by analyzing cost-of-living data from the WageIndicator Foundation. Desk research and literature review shows that there are significant differences in household welfare across geographic areas and that households spend a substantial proportion of their income on housing, food, and transportation. Poverty risk in Suriname is greatly influenced by inequalities in the labor market and in income, the effects of inflation, and policy deficiencies. By combining a literature review and living wage data analysis, this study identifies expenditure patterns among households and helps to better understand household and individual poverty. It can guide policymakers in developing solutions regarding wages, social protections and economic reforms that improve financial stability and social well-being especially among vulnerable groups.
The Relationship between Cost of Living and Minimum Wage in Türkiye: An Analysis of Real Wage Trends
Ceyhun Güler
Dokuz Eylül Üniversitesi
In Türkiye, recent minimum wage regulations have undergone significant changes, raising concerns about income adequacy amid rising living costs. This study examines the relationship between Türkiye’s minimum wage levels and cost of living, analyzing real wage trends to assess whether wage policies effectively ensure a decent standard of living for workers. Using a document review and primary data analysis approach, the study evaluates Türkiye’s minimum wage levels in the post-pandemic period (2022-2024). Using WageIndicator Living Wage estimates a comparative analysis is done, offering insights into the adequacy of minimum wages in covering workers' basic needs. The study assesses real wage trends in Türkiye within the broader macroeconomic context, considering inflation, purchasing power, and income distribution. The research emphasizes that minimum wages should not merely serve as a wage-setting mechanism but should be reconsidered within the framework of economic justice and social sustainability.
Living Tariff: The Case for Setting an Income-floor for Self-employed in the Gig Economy and Beyond
Martijn Arets1, Marta Kahancová2
1WageIndicator Foundation and Amsterdam University of Applied Sciences, 2Central European Labour Studies Institute (CELSI) and Comenius University
While the concept of a Living Wage sets a minimum income required for an employed worker to meet basic needs, it does not account for additional costs self-employed and gig workers face, such as holiday pay, insurance, taxes, and occupational expenses. The Living Tariff, inspired by the Living Wage concept, aims to address this issue. To bridge the gap and broaden the discussion on wage floors for all, WageIndicator developed the Living Tariff Tool, enabling workers and stakeholders to calculate a fair wage for gig workers and freelancers based on actual costs. The tool is available in Indonesia, India, Kenya, Pakistan, and the Netherlands, and draws on WageIndicator’s Cost-of-Living Database for 173 countries. The tool helps workers make better financial decisions and informs policymakers and platforms on cost-based pay floors. This paper conceptualises the Living Tariff, and evaluates the Living Tariff’s development and methodology, addressing gaps in wage floor calculations.
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