ILO calls to set “adequate” wages so that workers have a decent life

The International Labor Organization (OIT) called on governments to promote the existence of adequate wages that take into account both the needs of workers and their families, as well as economic factors.

In a recently published note at the Latin American level, the ILO highlighted that “the setting of adequate wages is an essential mechanism for promote living conditions and income“.

for workers of both sexes and their families, and at the same time guarantee the sustainability of the companies that create the jobs for these workers”.

Given that in different agreements it has called for establishing minimum wages, the ILO in its note highlights that it is possible to achieve minimum vital income through various sources, among them are wages, labor income in the case of self-employed workers, and social transfers.

Data from the Global Wage Report 2020/21 highlights that non-compliance with existing minimum wage levels remains a huge challenge globally. Of the 327 million wage earners estimated to be paid minimum wage or less, 266 million are paid less than the minimum wage, largely because of such non-compliance.

In the world there are already various initiatives aimed at establishing living wages through various mechanisms, such as legal minimum wages, collective bargaining or voluntary adjustment mechanisms.

To determine the level of a living wage in a specific location—and to estimate the potential gap between living wages and prevailing wages—multinationals and living wage initiatives often rely on a “benchmark” living wage.

The ILO indicates that these benchmarks typically estimate the cost of living for a family of a given size in a specific location, calculating the cost of food, housing, health, education, and other essential or unforeseen goods and services.

The determination of a “reference” living wage implies assuming some important assumptions regarding the number of workers and the number of wage earners in the home. For example, a certain salary may be enough to meet the needs of a family if it is received by two people from said household, but insufficient if there is only one wage earner in the household.

“Considering that inflation or the general increase in prices affects and reduces the real value of nominal wages, it is necessary that the existing reference points be updated regularly so that they do not lose relevance,” the note indicates.

In Mexico every year, through the National Minimum Wage Commission (Conasami), the increases to the country’s general and professional minimum wages are set, and it is expected that in the coming weeks the discussion of the 2023 increase will be fully entered, whose policy has been one of recovery since 2018.

Good practices for setting wages, such as:

• Taking into account the needs of workers and their families
• Consider economic factors
• Closing living wage gaps may require a set of measures that go beyond the realm of wage policies
• Strengthen national institutions and social dialogue
• Promote a minimum vital income for all, through a combination of means
• Paying a living minimum wage should not be the ultimate goal of wage policies, but rather one of its key objectives.