Living Wage: Background

Adam Smith, a Scottish moral philosopher and pioneer of political economy, was among the first to write about living wage in the 18th century. He argued that labor should receive an equitable share of what it produces and that this equitable share amounts to more than subsistence. In 1919, living wage was referred to in the Constitution of the International Labour Organization. Since then, the United Nations Universal Declaration of Human Rights (1948), the Council of Europe’s European Social Charter (1961) and the United Nations’ International Covenant on Economic and Social Cultural Rights (1966) have all recognized the need for workers to receive a living wage. It is thus considered a fundamental human right.

Reports by civil society organizations have highlighted the issue of low wages and excessive working hours in the supply chains of a range of commodities and manufactured items. While statutory minimum wages are established in 90 percent of countries, in many cases wages paid to workers fail to comply with them. Where there is compliance, minimum wages do not often permit a decent standard of living for workers and their families.

At present, attention to the topic of a living wage is growing due to declining wage shares worldwide, widening wage and income inequalities, and growing interest in corporate social responsibility. As a standard-setting organization, SAI is responding to this call and examining how it can most effectively address wage levels through collaborative initiatives with stakeholders and its SA8000® Standard.