Paying people below a living wage has real consequences — for health, security, dignity and wellbeing. Yet those impacts are largely invisible in conventional business accounting.
Project Description
Accounting for Living Wage set out to change that. The ambition was bigger than better reporting. It was to help shift living wages from a corporate responsibility issue to a core business and accounting issue — making the true consequences of low pay visible, and creating stronger incentives for companies to act.
The project developed and tested a practical model to show how inadequate wages can erode human capital, and to help companies measure, manage and report the gap between actual pay and a living wage.
Project Findings
The model was piloted by eight companies across 12 countries, covering sectors including apparel, consumer goods, food and beverage, luxury goods and retail. Most companies tested it within their first-tier supply chains. The piloting showed that a common approach to accounting for living wages is both possible and useful.
The key findings were:
- Comparable measurement is possible. The model provides a consistent way to quantify living wage gaps and track progress over time.
- Supply-chain data is the main challenge. Data becomes harder to access and standardize beyond companies’ own workforces.
- Impact valuation adds value. Translating wage gaps into impacts on worker wellbeing helps make the issue more tangible and actionable.
- Existing systems can be used. Living wage data can often be integrated into current audit, reporting and supplier-management processes.
- Standards can help drive scale. Wider adoption will depend on stronger disclosure expectations, consistent benchmarks and better data infrastructure.