Working poverty caused by low wages is a global issue and prevalent in many different industries. According to the International Labour Organization (ILO), almost one in five workers worldwide did not earn enough to lift themselves and their families out of extreme or moderate poverty in 2019. Low wages are often caused by economic inequalities – they threaten poverty reduction and hinder the fight against gender discrimination.

Commenting on the release of the new tool, Sanda Ojiambo, CEO and Executive Director of the UN Global Compact said:

“As the private sector employs two-thirds of the world’s wage-earning population, it has the ability to contribute significantly to global poverty reduction and inequality through the provision of living wages as an essential aspect of decent work. Using the Living Wage Analysis Tool to ensure a living wage for all workers benefits core operations, value chains and the wider operating environment and enables businesses to better meet their human rights commitments. While ensuring payment of living wages is often seen as a cost, it can offer a host of benefits to businesses, and should be seen as an investment.”

The push for a living wage is in response to the fact that legally-set minimum wages often fail to meet workers’ needs. By going beyond legal compliance, businesses can ensure that all their employees have the income to support their needs and those of their dependents, raising standards of health and well-being.

A living wage is an essential component of decent work, and a cornerstone of development, contributing directly to several of the Sustainable Development Goals (SDGs), including Goal 1: No Poverty and Goal 8: Decent Work and Economic Growth, as well as Goal 5: Gender Equality and Goal 10: Reduced Inequalities.

The Tool was developed through the UN Global Compact Think Lab on Living Wage with companies and organizations leading on the topic and questions based on real-life company practice, international standards and indicators.

As the world crosses the halfway point for achieving the Sustainable Development Goals by 2030, the UN Global Compact is challenging businesses to raise their ambition levels by taking tangible, accountable actions with the private sector well positioned to advance action on the living wage to meet the 2030 Agenda.