These stories are not new and whilst nationalities and specific cases of exploitation change, the hotel industry is yet another sector where migrant workers are often isolated, unaware of their rights and lack English language skills.  This can make them easy victims for exploitation. The Newsnight story follows a flurry of reports this year relating to the mistreatment of migrant workers in the UK garment, meat and fruit industries.

Impactt have often found that labour standard issues tend to be more prevalent at sites using agency, temporary and migrant labour.  These issues are complex and cannot be reduced to a matter of blame; sustainable improvement relies on cooperation from all involved.  As a result, Impactt specialises in engaging with workers and acting as an avenue through which practicable improvements for workers can be developed with buy-in from both sites management and customers.   

An exploratory study published last week by the Joseph Rowntree Foundation states that about one in four people in Britain are living below the minimum income standard and this is increasing as unemployment rises.  The Minimum Income Standard (MIS) for Britain is based on the public’s perception of what is deemed to be a “socially acceptable” standard of living.

 According to the latest research a single adult now needs £13,900 a year before tax, and a couple with two children requires a minimum of £27,600 to ensure a livable annual budget.  This is up £500 on the previous year.  You can check your own income against the MIS with their nifty Minimum Income Calculator.

The MIS study demonstrates that a vigorous public and political debate about what constitutes an acceptable level of minimum income is as important as ever.  Furthermore this research can perhaps speak to a wider, international debate on the living wage.

It is widely accepted that it is unethical practice to employ someone but pay them less than they need to live on; and the MIS study helps British society keep sight of what constitutes an acceptable minimum level of income.   The MIS study shows that members of the UK public continue to believe that a minimum standard of living should allow people in Britain not just to survive, but to have “what you need to in order to have the opportunities and choice necessary to participate in society”. 

Across the developing world however and in the production lines of international supply chains millions are being paid wages that are inadequate for a worker to support themselves and their family.  For instance the living wage debate has been argued heatedly in Cambodia where the legal minimum wage in Cambodia is $45 but a living wage has been argued to be closer to $93.   Minimum wages in the global south remain fixed whilst the cost of living increases.

The question remains: how can a living wage be defined and how can a living wage be calculated? 

How a living wage might be defined and quantified has been long debated by many and dismissed by some as too complex an issue.  However the MIS study demonstrates that research in this area can draw valid and meaningful conclusions on what constitutes a locally acceptable level of minimum income. 

As for whose responsibility is it to provide a living wage?  If companies were to bear the true cost of living for all their staff would we then see business success come hand in hand with a company’s ability to increase the sum of its human potential?

She argued that calls for living wages were simultaneously being localised through specific campaigns to establish living wages in particular sites of employment (such as Homerton Hospital, and Queen Mary, University College London) and globalised through campaigns on labour standards in global supply chains. This latter point resonated strongly with Impactt’s work which covers assessing the labour standards of agency workers in the UK as well as factory/farmworkers across China, Asia Pacific, the Middle East and North Africa.      

The lecture raised some challenging questions about our society given that some workers are unable to sustain themselves whilst working 40 or more hours per week. A person earning the UK minimum wage would have to work for just over fifty years to earn the amount of Sir Fred Goodwin’s annual pension.  A sobering thought we think.

This year’s report focuses on retailers’ efforts on Living Wages. This is a crucial area for ethical trade and labour standards, particularly in the era of the credit crunch, rising oil prices and high rates of inflation. As the report states: “As economic storm clouds gather … those same storm clouds bring with them major food price inflation for garment workers, who deserve better from the retailers whose profits they sustain.” Retailers’ efforts on living wages are indicative of the sophistication of retailer’s broader approach to ethical trade.

The report is challenging and sets the bar high. LBL and their partners have been calling for urgent increases in wages. They note: “In 2008, companies seem to be hearing the argument, and have begun to experiment with projects that aim to increase wages, rather than getting hung up on definitions.”

LBL identify four pillars of an effective living wage project. These are:

• A collaborative multi-stakeholder approach
• The involvement of worker organising particularly through trade unions
• Examining commercial factors throughout the whole supply chain
• A clear route map for implementing living wages for all workers

The report notes that only the ETI’s Living Wage project fulfils all of these criteria, but progress has been slow, and the project is yet to get off the ground.  Other projects have focused on improving productivity to increase wages.  However, LBL thinks that these projects are not enough, for the following reasons:

• Productivity improvements put workers who work long hours in high pressure environments under even more pressure.
• There is no guarantee that the benefits of productivity improvements will be passed on to workers in the form of higher wages
• Increased productivity may well lead to fewer jobs, or to different jobs
• Productivity improvements set the bar too low and mean that retailers take the eye off the ball of living wages.

We at Impactt don’t entirely agree with Labour behind the Label about this, as we have commented before.

However, it is clear from the report that not enough is being done to make a positive difference to the wages in workers’ pockets.  In LBL’s view, the vast majority of high street retailers have not achieved much progress in working towards a living wage for workers in their supply chains.  LBL says ‘one cheer’ for Sainsbury’s,  Asda, Primark, Arcadia and Tesco, and ‘two cheers’ for M&S, Gap, Monsoon Accessorize, New Look and Next.  But no retailer gets the full complement of ‘three cheers’.

Reading through the report it is hard not to conclude that even those retailers that have been singled out for praise by LBL are finding it hard to deliver real pay increases in workers’ pockets.  The exception is New Look who, in the words of the report, is the furthest advanced in work to increase wages, with a project that appears to have genuinely improved wages and working conditions, involved worker organising, and encompassed a (limited) examination of purchasing practices, all along with a genuine plan to roll this learning out across its supply base.”  We say, three cheers for New Look.

For the past couple of weeks the media has been full of stories about food inflation and its devastating impact on the developing world.  

Last week the World Bank and the IMF released reports indicating that we are facing a potential ‘food price crisis’ and thousands of people may starve.

There have been riots in Bangladesh, Cameroon, Egypt, Ethiopia, Haiti, Indonesia, Mexico and the Philippines. In Bangladesh 10,000 garment workers rioted on Saturday, vandalising factories and smashing cars in anger at low wages and high food prices. This could be an indication of more trouble to come.

Robert B Zoellick, President of the World Bank warned last week that “33 countries around the world face potential unrest because of the acute hike in food and energy prices.” He went on to estimate that the food price surge could mean the loss of 7 years in the fight against global poverty. At the same event, Dominique Strauss-Kahn, Head of the IMF, warned of mass starvation and dire consequences if food prices continued to rise.

In recent months across the developing world the prices for food staples such as rice, corn and wheat have all reached record highs. In the last two months alone the price of rice has skyrocketed, rising by about 75% globally. Wheat has risen by 120% in the last year.

The impacts have been uneven, but it seems East Asia has been hit the hardest. In Bangladesh the real price of rice reached a 19 year high as it rose by 70% this year. China, India, Vietnam and Cambodia have already responded by imposing tariffs and export bans, leading economists to predict worse to come.

The situation has been blamed on a number of factors, including:

• Rising cost of fuel and fertilisers;
• Climate change, drought and unpredictable weather patterns;
• Increased demand for biofuels, which leads to competing pressures for land;
• Changes in the diets of people in China and India, as the wealthy switch from carbohydrates to meat, which is more expensive and resource intensive to produce.

Of course, it is the poor across the developing world who are suffering the most. According to the World Bank, the poor spend as much as 75% of their income on food. Juan Jose Daboub, a senior Director at the World Bank, has said “In virtually every East Asian country, high food prices are…contributing to a significant decline in the real incomes of the poor.”

Unfortunately many of the workers in the supply chains of western multinationals, whilst perhaps not being the poorest of the poor in their communities, are struggling to maintain their livelihoods. The rioting in Bangladesh confirms that garment workers are suffering under the pressure.

Impactt has been looking at whether minimum wage provisions around the world constitute a ‘Living Wage’. For the 88 countries we investigated, we concluded that in only 23 countries did the Minimum Wage constitute a ‘Living Wage‘.

Food inflation on staple foods such as rice and wheat is running at such a level in some developing countries, that even massive and regular increases in the minimum wage are not enough to meet workers needs, and make something as vital as basic foods affordable. Wage increases that match, or exceed, inflation rates, or even food inflation rates, are only making up for past increases and are not tackling the continuing issue of increased prices.

Companies, NGOs and audit agencies should be aware that minimum wage provisions are increasingly unlikely to support workers’ livelihoods. It is more important than ever that workers earn a living wage and that wages stay ahead of inflation.

Companies should be responding directly to the crisis by implementing living wage programmes and looking to purchasing practices to help alleviate the pressure on workers. Buyers must be aware that the price paid for their last order, may not be sufficient for the next.