Simply put, a living wage is taking the expenses of all your "basic needs" and adding some type of discretionary income.
The problem is, only about 2% of the garment workers in the world are paid a living wage (Source: The True Cost). That number is even more mind blowing as almost every ethical certification requires a living wage. How is that possible?
We have a ton of problems with the current the living wage standards and how they are enforced. For more details, please read our article on living wages.
"Wages and benefits paid for a standard working week meet, at a minimum, national legal standards or industry benchmark standards, whichever is higher. In any event wages should always be enough to meet basic needs and to provide some discretionary income." (ETI)
"Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control." (UN - Universal Declaration of Human Rights)
"The remuneration received for a standard workweek by a worker in a particular place sufficient to afford a decent standard of living for the worker and her or his family. Elements of a decent standard of living include food, water, housing, education, health care, transportation, clothing, and other essential needs including provision for unexpected events." (Global Living Wage Coalition)
The WTFO outlines a living wage as meeting the basic needs of an individual. They define those basic needs as, “food, water, housing, education, health care, transport, clothing, and other essential needs, including provision for unexpected events.” (WFTO). This is the great definition of a living wage as you can actually see what it consists of however, I would like to know how they calculate one. Under the WFTO, a living wage is labeled as continuous improvement.
Remember, these are small artisan groups that might employ one or two workers. A minimum wage should be required but an open dialogue focused on the progression to a living wage standard is crucial. The WTFO requires fair negotiations by end of year two. Overall, we are impressed with the WFTO standard and their fight to increase wages!
Global Living Wage Coalition - Setting the new gold standard on how to calculate living wages.
ACT - A standard that involves worker representation and collective bargaining.
Fair Trade Certified provides premiums to employees. This theory is still a cool option to consider.
Ethical Trade Initiative's further guidance on living wages. Shows a nice perspective of the problem at large.
ILO's report on the Anker Methodology. It is quite long but for those who want to geek out, here you go!