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Living Wage and Voluntary CSR: Still an Oxymoron

Companies must give a living wage to workers everywhere if they are to merit the “CSR” label.

Submitted by: Alvaro J. de Regil

Posted: Jan 09, 2012 – 10:09 AM EST

Tags: living wage, csr, corporate social responsibility, shareholder vs stakeholder, discrimination

 
Alvaroderegilcastilla

By Álvaro J. de Regil

After decades of evolution, CSR remains a useless societal instrument to make business responsible for the impact of its economic activity on its sphere of influence.

A myriad of norms, standards, guidelines and codes have been introduced and yet, little has changed.  Corporations are still free to roam the world in pursuit of the most efficient sources of raw materials, suppliers, workers and the most lucrative markets to achieve their mantra: The maximization of shareholder value.

The root cause is not a rocket science conundrum, but quite easily identifiable. The market has been imposed on societies as an end in itself and lacks democratic control. As we can easily observe daily, financial markets and their rating agencies literally dictate to governments the market-centric policies that they want to see in place or they will decrease the credit ratings of non-complying markets – no longer regarded as nations.

Governments expediently oblige.

How can they not? The political careers of many politicians have been funded by the largest institutional investors and their corporations. The public matter has been privatized and politicians discuss it in private with the market’s owners. Actually, in case it has not been noticed yet, we have been living in corporatocracies and not democracies for many decades now and the symptoms continue to get worse.  

Two Conspicuous Traits of CSR

Not surprisingly, CSR continues to have two conspicuous traits that reflect the same ethos and expose its lack of true social responsibility and sustainability. 

1. Strictly Voluntary

First, all instruments available are strictly voluntary.  They are written in the context that CSR is a tool for corporations to improve their performance and their image. Since they follow the market’s logic they are generally oblivious to the fact that in true democratic societies CSR must be a process driven by regular citizens and their communities, as the main stakeholders of corporations, to ensure that corporations act in a sustainable manner from the perspective of public and not private interest.

This is fundamental because it should be the citizens and not corporations who define the areas to cover and the depth with which they are covered.

Author quote

Instead, CSR remains voluntary, for it expects the market’s invisible hand to make “the best allocation of resources.”  Clearly, contrary to conventional wisdom, the raison d’être of today’s governments is not to procure the welfare of all ranks of society but to provide the best conditions for the maximization of shareholder value.  Thus, any talk of making CSR a legally-binding instrument to ensure that companies do not profit over people and planet is a taboo issue not to be brought up at any time. 

2. Excludes the Living Wage

The other taboo issue is living wages, which is systematically excluded from the CSR ethos to the point that both concepts represent an oxymoron. Indeed, the issue is mired in blatant hypocrisy because companies know quite well that they are paying modern-slave-work wages to most workers in the developing world to impose an unequal exchange to secure the amount of shareholder value demanded by their institutional investors. 

Defining Living Wages

For this reason, Jus Semper has made living wages its sole mission through The Living Wages North and South Initiative (TLWNSI), a long-term program designed to gradually close the North-South living-wage gap within thirty years.

Our definition is a clear axiom.

Using the same logic of ILO´s Convention 100 for gender equality, a living wage awards “equal pay for work of equal value”, not just between genders but between North and South workers using purchasing power parities (PPPs) as the mechanism to define it. Equal pay occurs when purchasing power is equal. The premise is that workers must earn equal pay for equal work for reasons of long-term sustainability.

The concept is also anchored on two additional criteria of international law:

1. Article 23 of the UN Universal Declaration of Human Rights:

  1. Everyone, without any discrimination, has the right to equal pay for equal work,
  2. Everyone who works has the right to just and favourable remuneration ensuring for himself and his family an existence worthy of human dignity, and supplemented, if necessary, by other means of social protection.

The benchmark to determine what should be a living wage for a specific job in a specific country is the wages paid to equivalent workers in the benchmark country, which in the case of PPPs is always the U.S. 

A clear example: A worker working on Ford’s assembly lines in Dearborn, Michigan earns $27 dollars an hour, whilst the workers doing the same in Ford's plants in Brazil and Mexico only earn about $7 and $4 respectively. However, since Brazil's PPP index is 80 and Mexico's 64 then these Brazilian and Mexican workers must earn $21,60 and $17,28 an hour respectively, yet they only make about $7 and $4 respectively. 

Typically, closing the gaps will take several decades, but the key factor is the political will of governments to harness the market’s power and pursue this critical issue, and even shorten the time to fulfil it.

Brazil and Argentina vs. China and India

Two real life examples of countries with the political will are emblematic of our concept. At their current pace, Brazil’s minimum wage recovery plan, launched in 2010, will enable manufacturing PPP wages to close their gap in 24 years, whilst Argentina’s economic policy since 2003 will enable manufacturing PPP wages to do it in seven years.  China and India, in contrast, will take many generations to close the gap unless they shift to demand-side policies now.

In brief, including living-wages at the core of CSR and making it a legally-binding instrument of international law would make an invaluable contribution to the building of a truly democratic ethos.  Yet, if CSR continues to be offered not only voluntarily but also on an a la carte basis – where companies can cherry pick only what they like, it will contribute to the further mocking of democracy and nullify the prospects for sustainability.

Readers: What’s your take on mandatory CSR and a global living wage? Leave a comment or connect with us @CSRwire.

The opinions, beliefs and viewpoints expressed by CSRwire contributors do not necessarily reflect the opinions, beliefs and viewpoints of CSRwire.

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