Interview with Paulien Osse, Director WageIndicator Foundation

"The difference between a minimum wage and a living wage? A minimum wage is a legal right, a living wage is a vision – combining them will help improve wages worldwide."

Motto of the WageIndicator Foundation:

More labour market transparency for the benefit of all employers, employees and workers worldwide by sharing and comparing information on wages, labour laws and career. www.wageindicator.org.

  1. What is the approach of the WageIndicator Foundation and how does it relate to living wage?

How it started

"The WageIndicator started in the Netherlands 12,5 years ago as an online data base on wages, called ‘Loonwijzer’. We began researching different wage levels and informing the labour market, including the informal sector. For us it was very important to include the whole labour market, to make our site accessible to every employee on every level in every sector. We make it possible for every employee to check with our data whether or not his/ her salary is conform market standards.

Employees but also employers quickly began using our information on a regular basis. It grew into a success. Then in 2004 it became clear that there was a need for WageIndicator websites in other countries too. When we started to work internationally, we wanted to make sure that we would use the same methodology everywhere. This makes it possible to compare data on labour laws and wages in different countries. Now, we are active in 70 countries all around the globe."

Why is there a WageIndicator Foundation?

"There is a lack of coherent labour market information, easy to access, easy to understand, full circle, independent, free of politics in many countries worldwide. The national WageIndicator websites function as online, up to date labour market libraries for workers, employers, governments, academics and media alike." www.wageindicator.org

Growing internationally

‘In each country where we are active, we collect data on 1. Minimum wage structures, 2. Living wages by our Cost of Living survey, 3. Salaries per profession, 4. Collective bargaining agreements and 5. National labour laws. All these data, together with information gathered from interviews with workers and stakeholders, is publicly accessible in our databases. I want to stress how important it is to publish information about labour rights and collective bargaining in a country. Only when the legal requirements are known and met, can we start discussing a living wage. Then we are on our way to improve wages in developing countries.’

Have a look at the WageInidicator Collective bargaining database: http://www.wageindicator.org/main/labour-laws/collective-bargaining-agreements

"By the way, there is no reason to be condescending about labour laws in developing countries; they are good, as are their collective agreements. People just need to know their collective rights. For us, living wage in international supply chains of multinational companies is too narrow a focus; you only reach a small part of the labour market. I truly believe that labour market information should be available and useful for everybody and not only for one category of workers."

What is the WageIndicator Foundation for?

"To assist individual workers and employers with real wage data during negotiations and job search. To assist workers, employers and labour inspectors with comprehensive insight in national Labour Law, and how to comply with the law. Assist individual workers and employers with problems of daily working life."www.wageindicator.org

Minimum wage – living wage

"In short, the minimum wage levels are enforced by law. The concept of living wage is not written in the law and should be perceived as a suggested income level to achieve decent living standards. Dreaming about a living wage is not helping workers directly; setting minimum wages and collective agreements provides more stability and security for the worker. That is why I say: ‘a minimum wage is a legal right whereas a living wage is a vision. Working to realise both brings us further in improving wages."

  1. Why do you calculate a living wage and how?

Numbers instead of words

"Well, ultimately, living wage is the goal, but it has to be realistic, not dictated by normative guidelines from the ILO or the OECD. By calculating living wages for 50 countries (to date –see this http://www.wageindicator.org/main/salary/living-wage/living-wage-map), we aim to provide a meaningful comparison of how costly it is to lead a decent life across the globe. In the majority of countries the estimated living wage is higher than the minimum wage. So as an answer to this question I would say that our approach is the first attempt ever to show living wages worldwide in numbers instead of in words. Our vision is to set international benchmarks, tailored to every country, to which one can refer equally in the Netherlands or Ghana."

Calculation of a living wage

"The estimate of living wage comprises the cost of living (monthly rent of 1 bedroom apartment outside of the city centre), public transportation monthly pass and monthly money necessary for food for one person. All figures are taken from Numbeo.com as of January 2013. Numbeo is the online data base of user-contributed information about the cost of living in cities around the world. www.wageindicator.orgFrom October, 2013 WageIndicator will start its own Cost of Living survey that is compatible with Numbeo dataset. It will be publishes online soon."

Individual – family unit

"We calculate a living wage for an individual worker, not including his or her family, because a minimum wage is also based on an individual worker and we want our data to be comparable. This is different from other approaches that measure a living wage by household units. The prices of food assume a personal consumption of 2000 calories per day. The balanced food basket is constructed by Numbeo (e.g. 0.25 liter of milk, 130g of bread, etc.) and the cost of food is estimated on a monthly basis. We top the total cost by 20% to include discretionary expenses that differ from country to country.

Our simple and straightforward calculation neutralises two barriers that always come up in discussions about the implementation of a living wage. The first is family size; this issue is sensitive in countries where family sizes differ greatly. The second one is the lack of data. There is a lack of data for calculating a living wage in specific areas, undeniably. But we chose to be pragmatic by using Numbeo.com to make numbers available in a systematic way. Maybe our calculation will change in the future but at least we are coming up with reasonable numbers now."

  1. How is the living wage issue perceived in the countries where you are active?

Generalisations

"You know, in the debate about wages one should be careful not to generalise too much. Many people state that real wages in low income countries are always lower than minimum wages. This is true in most of Central Africa as 2/3rds of the population earns below the minimum wage but it is incorrect in Kenya where the wages are generally above the legal minimum wage. Another issue is that in prevailing wage numbers, differences between urban and rural wages are not shown. That is why we start our Cost of Living survey.

The common assumption that social dialogue is not known outside of Europe isn’t true either. In Africa, for example, collective agreements only exist on paper. Local laws are mostly reasonable but non -compliance and non-enforcement are the real issues. As said, by publishing information about labour rights change happens. For instance in Pakistan, a country with a complex minimum wage structure, the government is content that we publish this. Knowledge, transparency and accessibility are key – we spur positive change by a kind of e-governance!"

Bringing change

"I am proud of what we achieve on the ground in all these countries. We provide data in a systematic way that feed the discussion about labour rights and wages on all levels – in academic conferences, at the ILO meetings, in trade union and employers meetings and with workers. The living wage debate is often an employment scheme for economist; we, on the other hand, work for the cleaning lady so to speak. We try to make it practical and real by publishing numbers for people."

  1. What would you characterize as the main obstacles to the implementation of a living wage? How do you tackle these obstacles?

Lack of data

"The main obstacle that we face is the lack of up-to-date information on cost of living and wages in the countries where we are active. Numbeo.com goes only so far – it does not provide much data on cost of living in rural areas for instance. This information is not available from official sources either, in many countries there are no professional statistical agencies. What we started to do is collect necessary information through web-surveys.

Another obstacle is that multinational not always comply with the law in their international supply chains. We do not need more external auditors in supplier factories or plantations; it should be an overall joint effort to comply with national legal requirements. That being said, the collective agreements made in cooperation with multinationals do have positive effects on the national level of labour standards."

  1. What is your position on efforts of harmonizing the approaches of the different initiatives working on living wage by having a European conference?

"All living wage initiatives are welcome. They keep the discussion on-going and set higher standards for wages in the countries. The fact that we all discuss living wage and that we now come with real numbers, means that in the end we will reach that goal. We continue to take part in the discussions because we really believe that it helps. Therefore I would be very happy to come to Berlin and talk more about what we do!"

Nora El Maanni

Irina van der Sluijs

Berenschot International, October 2013