UN Responsible Business and Human Rights Forum, Asia-Pacific 2021

Socio-Economic Impacts of Paying Living Wages to Build A Resilient Economy | A Session by Oxfam India and Oxfam Germany

28 May 2021 | 10 AM IST / 11:30 AM BKK

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The last 10 years have been most profitable for the multinational corporations across the globe.  Statistics suggest that the fortune 500 firms altogether have increased their profits by 156% from $820bn in 2009 to $2.1tn in 2019[1]. Outside of the Europe and the United States- in developing countries such as Nigeria or in India some of the companies have generated an increasing portion of global corporate profits over the past decade, and they wield immense power in their countries of origin.

Most of these profits however, were not reinvested in company’s own productive capabilities nor did they went to the government (in the form of tax pay outs) wherein they could have been invested in social protection. Instead these went to the wealthy shareholders following the conventional “shareholder” centric model, which persists even when the pandemic is ongoing. Oxfam analysis has found that the world’s largest companies’ donations during COVID19 on average amounted to 0.32% of operating income for 2019 and thus do not constitute an adequate contribution considering the financial costs of this crisis and the extent of corporate profits[2]

Stagnant wages and poor working conditions thus continue reality of those working in the upstream of the supply chain. The worst affected in the supply chains are the sectors which are labour intensive and overrepresented by women workforce such as the agricultural and allied sectors.  This is largely because of the flexible nature of the supply chains because of lack of transparency which facilitated pushing down the risks and the costs towards the most vulnerable actors of their supply chains.  There was last minute cancellation of orders, wage thefts, job losses that were reported globally-  Hunger and poverty dominated!  About 80% of workers in informal sector lost job and 63% relied on two meals per day in India.[3]

Wage poverty in the upstream of the supply chain is largely because majority of the workers in supply chains even before pandemic hit were earning daily wages which closer to the minimum wages, thus leaving them with no cushion for safety and security during the unforeseen times such as Covid. The work poverty and perpetual struggle for survival on daily wages being insufficient to survive takes away their power to negotiate better and pulls them further into several elements which are against the fundamentals of “Decent work”.

A study conducted by Oxfam across the 12 food supply chains in several sourcing countries reveals that usually the workers/ small holder at the upstream of the supply chains receiver lesser than <6.5% percent of the end consumer price, and, that significant share of the rest (slightly more than 80 %) goes to the accounts of the big retailers and the suppliers in sourcing destinations. [4] It also points that it would need supermarkets and other supply chain actors to invest only a marginal amount to close the gap between the current and living incomes / wages levels (in comparison to the end consumer price). The amount was determined to be between 1% to 5% (without increasing the end consumer price) across the basket of 12 commodities that were studied. This is pretty doable and needs only the intent as the discrepancy in the economic impacts of COVID-19 is no coincidence. These are only a result of an economic model that have historically prioritises profits for the wealthy, while encashing on the vulnerabilities of many.

JOIN IN FOR A POWERFUL DISCUSSION ON:

  1. The impact of Covid 19 on the lives and livelihoods in two supply chains of India (tea and sugar) and what is the gaps that needs to be closed.
  2. Share case studies/ lessons from across the world wherein companies have moved up in making commitments for payment of living wages.
  3. Discuss on who will close the Gap and How?

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[1] https://money.cnn.com/magazines/fortune/global500/2009/full_list/index.html

[2] Profits before taxes- Oxfam Report

[3] https://www.firstpost.com/india/80-of-indias-informal-workers-lost-jobs-during-covid-lockdown-63-survived-on-two-meals-a-day-shows-data-9264141.html

[4] Ripe for Change – Oxfam Report 2019

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