Improve policies in producer countries

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Several of the factors which drive low wages are beyond an individual company’s scope of influence. A strong legislative framework in favor of living wages, and a level playing field between companies, is highly supportive in the transition to a living wage economy. It is important that countries that import products also adopt clear laws and regulations in favor of living wages to send a signal of trust to producing countries (see 'improve policies in consumer countries').

 

A strong legislative framework for living wages includes:

Challenges addressed by this intervention

Path

Inadequate wage setting mechanisms - e.g. lack of CBA

When collective bargaining is insufficient or when collective wage setting does not exist, the government can establish a statutory minimum wage.

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Limited access to finance

Governments can provide access to finance for those who fall outside the ‘conventional’ financial system or encourage financial institutions to invest in companies with a higher risk level.

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Lack of (adequate) social protection

Governments are in the lead for creating adequate systems of social protection.

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Lack of market transparency

With a strong legal framework, governments can stimulate companies to improve transparency in their supply chains and take responsibility for the practices in it, such as the remuneration of workers.

Practical tips

Different actors play a role in establishing strong policies in producing countries. For each actor, practical tips are given below.

For Government

Involve different policy domains

Realize that impact on jobs can be achieved via different policy domains. If one thing is not possible, try to discover other options.

Be supported by the facts

Be supported by the growing evidence that there is a strong business case (For example: The case for Living Wages) for paying living wages. Governments, companies and investors will value your efforts.

Engage in dialogue

Discuss the importance of the theme and the challenges linked to it, in government-to-government dialogue, international institutions and other relevant platforms.

Partner with other governments

Partner up with other producing governments, with governments in consumer countries and with companies dedicated to the theme. Discuss your concerns and dilemmas.

Involve others

Involve workers' representatives and labor unions, industry organizations and civil society organizations, since cooperation helps to create ownership.

For Supporting organisation

Engage in multiple dialogues

Keep a broad perspective on this topic. Wages often depend on a complex set of laws and regulations. Improvement in one area can be undermined in another area.

Go international

Make sure to continuously discuss this topic at an international level.

Be supported by the facts

Emphasize that a strong legislative framework for human rights is in the best interest of a country and its economy.

Set the context

Remind that investors and international companies will increasingly value strong human rights and see the absence of a legal framework as a risk to business and assets. 

Partner with others

Partner with organizations in producing countries and in consumer countries. Where there are no existing collaboration platforms, consider how to establish new public–private alliances at the country or regional level.

Join forces

Invite investors, companies, governments, industry representatives to jointly reach out to policy makers to advocate for better policies.

Be creative

An effective way to change policies is via the public opinion. Search for creative manners to inform citizens in producing and consuming countries about the importance of the topic. Social media will be your friend.

For Buyer

Commit

Publicly commit to paying living wages and walk the talk. Make sure countries that adopt better policies are not punished but rewarded for their efforts.

Put it on the agenda

Make the rights of workers a reoccurring topic on your companies’ agenda, including top management, during business trips and country visits.

Cooperate with others

Cooperate with others in your sector, the more the better, and jointly signal that you are willing to pay a living wage and will not move away from countries that adopt better policies.

Cooperate with governments

Share experience and information with policy makers and regulators to develop the evidence base for policies and regulations that enable living wages to be paid in supply chains.

Respect local actors

Respect the primacy of local actors – regulators, workers and employers – in determining what working conditions are in the country or sector in question, while recognizing the country’s commitments to international standards such as those of the International Labour Organization.

For Supplier

Cooperate with governments

Share experience and information with policymakers and regulators to develop the evidence base for policies and regulations that enable living wages to be paid in supply chains.

Show the relationship

Explain how the payment of living wages can boost the economy and the well-being of national citizens.

Be supported by facts

Explain how there is an interaction between a strong social security system provided by the government and the wages companies need to pay.

Advocate

Stress the importance of a level playing field.

Ensure a holistic approach

Emphasize that living wage is influenced by diverse policy areas and that a holistic vision is needed.

Enlighten

Emphasize that because buyers are increasingly asking for human rights protections, it becomes a requirement.

Gender lens

In many societies men and women don’t have equal rights. The empowerment of women is crucial to improve the household income situation. Policies to secure equal payment of men and women are a fundamental part of a strong legislative framework, just as the presence of social protection in relation to education, childcare and access to medical services. 

Case studies

Malawi 2020 Tea: Revitalizing the Malawian tea sector

The Malawi 2020 tea partnership is a unique holistic approach towards a future proof, sustainable and inclusive tea sector in Malawi. The payment of living wages is an important part of the program. One way to close the gap is by revitalizing the tea plantations and supporting the implementation of good agricultural practices.

Read the whole story ›

Sector considerations

Ideally, the legislative framework protecting worker rights and requiring the payment of a minimum wage are not sector specific. Although there are examples from specific sectors, there are no sector specific considerations for advocating for better policies.

Supporting materials

FLA News

FLA shares announcements about labor rights issues, and updates on the organization and its progress in promoting and protecting workers’ rights, including joint letters to governments.

Wage indicator

The national WageIndicator websites function as online, up to date labor market libraries for workers, employers, governments, academics and media alike. Check out the movie to learn more.

Supporting partners

Buyer
Supplier
Government
Supporting organisation

Inspiration and guidance

If you need more inspiration or guidance for the implementation of ‘improve policies in producing countires', or if you want to add a tip, sector consideration or case study send an email to the IDH living wage experts!

Malawi 2020 Tea: Revitalizing the Malawian tea sector

The Malawi 2020 tea partnership is a unique holistic approach towards a future proof, sustainable and inclusive tea sector in Malawi. The payment of living wages is an important part of the program. One way to close the gap is by revitalizing the tea plantations and supporting the implementation of good agricultural practices.

It is clear that government policies can impact industry operations. Therefore, a close link to government is recommended. The Malawi Tea 2020 program is an example in which governments were closely involved. The involved actors realized that government policies, such as tax regulations, have a large impact on the income of workers. An unintended impact of wage increases could be that workers have to pay higher taxes and could remain with a lower net income. In the program, stakeholders were able to influence the government on tax regulations for workers. In addition to that, the government of Malawi also announced a significant increase on the country’s minimum wage in 2020.