The topic of living wage is critical to human rights and sustainable trade, and therefore an important area of focus for IDH. IDH is working with a wide range of stakeholders to strengthen international alignment and to build tangible living wage solutions through the Roadmap on Living WagesIDH Roadmap on Living Wages Read more – a data driven approach, consisting of five integrated steps.

The following Key Performance Indicators (KPIs) are the minimum that IDH recommends for monitoring and public reporting, as stakeholders move from Step 2, Measuring Living Wage Gaps through Step 5, Share Learnings.

These indicators can be directly derived from the Salary MatrixSalary MatrixRead more – the recognized tool of choice to calculate Living Wage Gaps – and can be tracked over time by farm, supplier, country or aggregate procurement. These indicators are aligned with other global indicators and reporting frameworks.

At this time, IDH recommends that, at a minimum, companies who have begun assessing and addressing living wages, monitor and publicly report progress against the following 2 indicators. An additional indicator on the size of the living wage gap for the lowest paid worker will be tested soon.

1. Workers with total remuneration below a living wage (# and %), disaggregated by gender.
2. Average size of living wage gap (%), disaggregated by gender.

IDH recommends reporting results both for a moment in time and as change over time.

For example, “The current average size of the living wage gap for women is 20%” and “The living wage gap has decreased among women by 5% since the last reporting period”.

It is also important to keep in mind that these indicators are only relevant to the percent of total sourcing that is represented by the Salary Matrices. For context, and to inform potential strategies to address wage gaps, companies may wish to incorporate additional information related to the total spend under management (SUM) which the Salary Matrices represent and percent of total reported volume procured.

See full document here.

The core recommended indicators are by no means exhaustive. Nor do they diminish the importance of qualitative analysis and social dialog, including the critical voice of workers, for understanding and improving working conditions, enabling environments, and opportunities for wage improvement.

Due diligence on corporate commitments and enabling environments is a fundamental. As such, IDH encourages and supports the work of other organizations and financial institutions that are taking a lead on due diligence in these areas.

Important and publicly available resources for measurement and reporting include the UN Global Compact’s (UNGC’s): “Achieving the Living Wage Ambition: Reference Sheet and Implementation Guidance” and the UNGC/Oxfam: Poverty Footprint.

It is likely to become necessary for companies to monitor against additional indicators relevant to their projects and/or public commitments. Additional quantitative and qualitative indicators related to wages, corporate responsibility practices, and risk management can support internal learning, external reporting, and design of supply chain programs to address living wage gaps. Additional indicators linked to the IDH Salary Matrix can be found here.

IDH is available to suggest additional resources as needed.

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  Ronald Sanabria

  Sr Program Manager

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