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Definition & Legal Instruments
ILO and UN Conventions
There are no current international laws or conventions on living wage or living wage calculation. Conventions that exist on minimum wage are the following:
- ILO Protection of Wages Convention, No. 95 (1949): The convention establishes that wages must be paid in legal tender at regular intervals and sets out other requirements for fair pay processes for workers.
- ILO Minimum Wage Fixing Convention, No.131 (1970): The convention requires ratifying States to consider the needs of workers and families in establishing a minimum wage (Article 3).
- ILO Minimum Wage-Fixing Machinery Convention, No. 26 (1928): The Convention itself does not refer to the needs of workers and their families, but the accompanying Recommendation R30 considers that “For the purpose of determining the minimum rates of wages to be fixed, the wage-fixing body should, in any case, take account of the necessity of enabling the workers concerned to maintain a suitable standard of living.”
Around half of all Member States have ratified ILO Convention No. 95 and over 50 have ratified ILO Convention No. 131. Countries that have ratified one or both of these conventions should have adequate legal instruments in place to implement them at the national level. This, however, does not ensure that legal protection for workers is of equal efficacy — or equally enforced — across all countries.
In addition to the ILO conventions, the International Covenant on Economic, Social and Cultural Rights (ICESCR) also incorporates State obligations that are relevant to living wages. Article 7, ICESCR states that remuneration should provide workers with a “decent living for themselves and their families”, including a “fair wage”. In elaborating on State obligations under this provision, the ESCR Committee has stressed that the notion of a fair wage is not static, noting that “[f]or the clear majority of workers, fair wages are above the minimum wage.” Again, countries that have ratified ICESCR, should have measures in place to implement this international treaty at the national level.
Living or Minimum Wage through ILO Lens?
Although there are no ILO conventions on living wage, it could be argued that living wage is a rebranding of the ILO conceptualization of the minimum wage. Specifically, ILO Convention No. 131 states: “minimum wages shall, so far as possible and appropriate in relation to national practice and conditions, include:
- The needs of workers and their families, taking into account the general level of wages in the country, the cost of living, social security benefits, and the relative living standards of other social groups;
- Economic factors, including the requirements of economic development, levels of productivity and the desirability of attaining and maintaining a high level of employment.”
Likewise, the Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy (MNE Declaration) states that wages should: “provide the best possible wages, benefit and conditions of work. The elements to be taken into consideration should include:
- The needs of workers and their families, taking into account the general level of wages in the country, the cost of living, social security benefits and the relative living standards of other social groups; and
- Economic factors, including the requirements of economic development, levels of productivity and the desirability of attaining and maintaining a high level of employment.”
Also, the term “living wage” is found in the preamble to the ILO Constitution adopted in 1919:
“And whereas conditions of labour exist involving such injustice, hardship and privation to large numbers of people as to produce unrest so great that the peace and harmony of the world are imperilled; and an improvement of those conditions is urgently required; as, for example, by the regulation of the hours of work, including the establishment of a maximum working day and week, the regulation of the labour supply, the prevention of unemployment, the provision of an adequate living wage, the protection of the worker against sickness, disease and injury arising out of his employment, the protection of children, young persons and women, provision for old age and injury, protection of the interests of workers when employed in countries other than their own, recognition of the principle of equal remuneration for work of equal value, recognition of the principle of freedom of association, the organization of vocational and technical education and other measures.”
This quote also highlights the important issue of contextualizing the wage in the broader context of conditions of work and social protection. What constitutes a living wage in the absence of social protections and a higher risk of injury, unemployment, loss of income, hours required to attain a living wage, etc., will look very different depending on each of these variables.
Other Legal Instruments
The UN Guiding Principles on Business and Human Rights (UNGPs) set the global standard regarding the responsibility of business to respect human rights in their operations and across their value chains. The Guiding Principles call upon States to consider a smart mix of measures — national and international, mandatory and voluntary — to foster business respect for human rights.