As Communications Assistant at ISEAL, I recently came across the Anker methodology used by the Global Living Wage Coalition (GLWC) to measure living wage. This methodology is openly available as a manual online and presents a unique and forward-thinking approach to measuring living wage. In this piece, I present the 10 key things I think you should know about this approach to measuring living wage.
The Global Living Wage Coalition (GLWC) is an initiative made up of seven sustainability organizations who share the common goal: to improve wage levels in supply chains, affording workers at least a basic standard of decency in their lives. Together with experts Richard and Martha Anker, the GLWC is advancing a state-of-the-art methodology for measuring living wage and publishing publically-available benchmark reports calculating living wage in countries around the world.
Measuring a living wage is far from a radical idea. The concept of a living wage has been championed by influential leaders: popes, presidents and academics, as well as respected institutions and organisations through vehicles such as the Universal Declaration of Human Rights and the United Nations Sustainable Development Goals. The radical part of the Coalition’s work however, is the unique and ground-breaking methodology used to measure living wage. Here is my choice of the 10 key things to know about measuring living wage using the Anker methodology:
- If you think living wage calculations are only applicable in higher income countries, think again; Anker and Anker’s methodology is universal and relevant for all countries, which is important because it ensures that…
- …the methodology is internationally comparable yet locally specific. This allows for highly accurate living wage estimates based on international norms and principles which also take account of geographically-specific information. For instance, when investigating the food allowance, GLWC base suitable food on the World Health Organisation’s definition (caloric intake and macro and micro nutrients), whilst taking note of the local culture and food norms. This ensures that the type of diet in the living wage estimate is both nutritional and representative of a region.
- Though it is common sense, it is important that this methodology is so specific to time and space. This is significant because it allows for different living wage estimates within the same country, which can reflect differences in living costs between urban and rural areas, mountainous and coastal zones, or simply the North and South, East and West as they present more heterogeneous conditions. Furthermore, it ensures that a flexible approach to living wage is maintained since estimates change over time with inflation and economic development.
- The cost of a living wage is based around the principle of workers and their families leading a ‘basic but decent life style’; basic human needs are agreed upon by international bodies, and the concept of a decent living is enshrined in the UN Sustainable Development Goals. The living wage calculations by the GLWC look into relatively inexpensive ways to achieve a basic but decent standard of living.
- In order to estimate the cost of a basic but decent life for workers, the Anker methodology breaks down expenses into three categories: food, housing, and everything else (non-food non-housing). As mentioned above, food is calculated by combining internationally accepted principles and local customs. Let’s take a look at the housing estimate.
- Housing costs are estimated using international and national standards for decency (e.g. dwellings located outside slums and unsafe areas, that have permanent walls, roofs that do not leak, and adequate ventilation; amenities such as electricity, water, and sanitary toilet facilities; and sufficient living space so parents can sleep separately from children). So, much like food, housing must meet the minimum requirements for decency as outlined by international norms, whilst taking account of local custom and national standards. For example, in some places (especially rural areas in many developing countries) a safe and hygienic pit toilet could satisfy the standard of housing necessary for that region, whilst in New York for instance, pit toilets are not the norm so would not be accepted in a living wage estimation.
- The non-food non-housing costs include expenses for everything from clothing to transport. Special attention is paid to make sure that healthcare and education expenses within non-food non-housing costs are sufficient as healthcare and education are considered basic human rights in the Anker methodology.
- Living wage calculations factor in financial provision for unexpected events. Workers should not fall into poverty due to short-term economic and social circumstances, and so an additional 5% of total costs is added.
- Mandatory deductions from pay (taxes, social security, etc.) are taken into consideration because sufficient disposable income is required so workers can afford a decent living standard. Because of this, the Anker methodology offers a net (after mandatory deductions) and gross (amount before deductions) living wage estimation in GLWC reports.
- Living wage calculations take into account typical family size in that area and the typical number of full-time equivalent workers per family for the location, which lend the ingredients for the formulae for net living wage:
- Net living wage = cost of basic but decent life for a family / number of workers per family