As the world faces multiple global crises, soaring levels of inequality are compounded by the consequences of the COVID-19 pandemic and the war in Ukraine, further exposing the cracks in an already broken system and driving up the cost of living everywhere.
Today, being employed offers no guarantee of financial safety. Living wages are wage rates calculated based on what it costs to live and differ from arbitrary government minimums which tend not to provide a decent standard of living. According to the International Labour Organization, over 630 million working people – almost one in five of the world’s employed population – do not earn enough to lift themselves and their families out of poverty. We believe, alongside the Business Commission to Tackle Inequality (BCTI), that a fundamental shift in our approach to tackling inequality is desperately needed; a shift towards working with other businesses who want to be a force for good and implement living wages across their global operations, and use their platform to encourage other businesses to join their efforts to ensure workers everywhere can afford to meet their everyday needs.
In the UK, businesses such as IKEA and Burberry are already playing a leading role. The Living Wage Foundation sits at the heart of an independent movement of over 11,000 employers who have collectively placed over £2 billion back into the pockets of low-paid workers since 2011. We recognize their leadership and commitment always to pay a real Living Wage, calculated annually to reflect up-to-date living costs, through our Living Wage Employer accreditation. Crucially, accreditation requires employers also to pay third-party contractors like cleaners, caterers and security guards a real Living Wage, which is where the Living Wage campaign began in the UK over 20 years ago. Given the current context, the leadership shown by these employers has never been more critical for low-paid workers and their families, who feel the pressures of rising costs much sharper than others.
The cost-of-living crisis is piling pressure on everyone. Record levels of inflation, which the United Nations expects will reach 6.7% globally this year, are eroding people's living standards, and most acutely, those on low pay. Our recent polling showed 78% of low-paid workers in the UK say the cost-of-living crisis is the worst financial period they have ever faced. Globally, an IPSOS poll carried out for the World Economic Forum in May found that one in four people in a sample of 11 high-income countries were struggling financially. In this context, paying a wage that reflects the cost of living becomes more important than ever in tackling more comprehensive poverty and inequality.
The introductory report from BCTI demonstrates the scale of inequality and identifies it as a systemic risk. It highlights shocking figures; for example, the top 10% of earners now receive 52% of global pay, compared to the lowest-paid half of workers who receive only 8.5%. This stark inequality erodes social cohesion, undermines trust in institutions, fuels civil conflict and political polarization and prevents collective action from tackling complex challenges. The report makes a strong case for why business action is needed as a force for good.