Sabita Banerji, the Ethical Trading Initiative's Knowledge and Learning Advisor, blogs on the new 'national living wage'.
As a tripartite alliance of companies, trade unions and NGOs, the Ethical Trading Initiative (ETI) promotes respect for workers' rights worldwide. Company members commit to progressing towards Living Wages throughout their supply chains, but complying with the UK's new 'national living wage' will not mean they are meeting ETI standards.
Organisations that sign up to the ETI make a commitment to work towards the realisation of a set of labour standards in their supply chains which are described in our Base Code. They uphold the right of workers everywhere to a Living Wage, one of nine labour rights principles based on internationally agreed standards such as the ILO Conventions.
ETI recognises the complexity of global supply chains which can have many layers and branches and which are notoriously difficult to keep track of. We also recognise the political, social, economic and commercial challenges that companies face in trying to ensure that all workers in their supply chains enjoy their internationally agreed rights. One of the most challenging of these to achieve is Living Wages and some companies are tempted to treat this as merely 'aspirational'.
Nevertheless, ETI has made it clear that we expect our members to set themselves clear, time-bound targets for practical actions that will contribute to the achievement of Living Wages in their supply chains, to encourage their suppliers to respect freedom of association and enter into collective bargaining agreements, to report on the actions they have taken to support Living Wages, and to provide verifiable evidence of these actions and their outcomes.
When the UK government announced in July last year its introduction of an increased minimum wage for over 25's, ETI cautiously welcomed it, recognising that it represents progress from the previous level for this age-group. But we felt that calling it a 'national living wage' caused potential confusion. So we have provided our members with clear guidance on our position as regards the new rate and reminded them of our expectations of them in relation to Living Wages.
We explained that the new rate is not, in fact a Living Wage, which we define as "enough to meet basic needs and to provide some discretionary income". We have reiterated that the so-called 'national living wage' does not meet the criteria or level developed in the UK by the Living Wage Foundation and that paying this rate would therefore not meet the standards of the ETI Base Code.
We also reminded our members that, although it will be legal to pay workers of different ages at different rates for the same work when the new minimum wage for over 25's comes in, this would constitute discrimination according to the ETI Base Code.
We would ideally like to see all our members becoming Living Wage Employers as well as promoting and enabling Living Wages in their supply chains. We would hope that this would not be achieved at the expense of jobs - especially for under 25 year olds - bonuses or overtime payments and we would like to see them maintaining differentials between workers at different grades.
We strongly believe that businesses will reap long term business benefits from doing so, as their workers and those in their supply chains will be happier, healthier, more skilled, more loyal, better able to support themselves and their families without relying on benefits and better able to contribute to their economy.