With the cost of living steadily increasing across Australia, the concept of a living wage has gained increasing popularity and support. For B Corporations (B Corps), paying a living wage will now be a requirement in their evolving standards. But what does it actually mean to earn a living wage?
What is a Living Wage?
A living wage allows an individual to afford a decent standard of living for themselves and their family. It goes beyond a minimum wage in that it accounts for the needs and expenses an individual has to live a decent and fulfilling life.
Living wages can be incredibly complex to calculate as they take into account a variety of factors, such as location and the size of a family, it even considers cost of living factors. To identify a living wage we use benchmarks and research conducted by specialist organisations, such as WageIndicator and Fair Wage Network. Both of these organisations provide information about living wage by region which you can access by getting in touch with them.
The Difference Between a Minimum Wage and a Living Wage
A minimum wage and a living wage are not the same. While they have similar intentions, a minimum wage is set by governments and is legally the lowest wage that a company can pay. In many countries around the world, the minimum wage does not provide individuals with a decent standard of living.
A Win:Win For Companies & Employees
Paying a living wage not only benefits employees but can also build a more productive and stable workforce. Paying workers a living wage can lead to greater productivity, stronger work commitment, greater employee retention and contributes to stronger communities.
A New Way of Business
Living wage will gain even more attention in the new B Corp standards that are set to be introduced in early 2024. B Lab has identified living wage as a core component of responsible business practices, stating that ‘a living wage is a human right and an enabling right, meaning it helps achieve or protect other rights’.
Looking after workers is a major focus of the current B Corp certification process, as ‘workers’ is one of the five key impact areas that businesses are evaluated on. This includes the health, wellbeing and safety of employees, career development opportunities, employee engagement and satisfaction, and financial security, including questions about living wage.
Whilst the concept of living wage is already included in the current standards, paying workers in your operations a living wage will now be a non-negotiable requirement to become a certified B Corp. More than that, companies will also be required to assess their supply chain and take meaningful action to pay those workers a living wage as well.
A recent report by Baptist World Aid ranked almost 600 Australian and international fashion brands such as Cotton On, Billabong and Windsor Smith, on their efforts to prevent worker exploitation and environmental degradation in their supply chain. They found that only 10% of companies evidenced paying a living wage at some final stage factories. The top-ranked companies were the Australian men’s and women’s underwear brand, Mighty Good Basics, followed by outdoor clothing brand and B Corp, Patagonia. Learn more about how Patagonia is working towards a living wage for all workers in their supply chain.
Living Wage in Australia
As of January 2023, the minimum wage in Australia is higher than the living wage. So as long as Australian companies are paying employees based in Australia above the minimum wage they are effectively paying a living wage.
Paying a living wage is an important step towards ensuring that all individuals have the opportunity to live a decent and fulfilling life. By prioritising the needs and well-being of workers, B Corp’s new standards aim to build stronger communities and address the rising cost of living across many countries.
If you want to find out more about the B Corp standards, or are interested in how you can better contribute to the wellbeing of your employees, get in touch with Social Change HQ.
To find out more about how the B Corp movement is tackling fair wages, listen to the B Lab Forces for Good episode, ‘How Can Business Alleviate Poverty and Promote Living Wages?’.