Living Wages in Global Value Chains and the Role of Multi-National Enterprises

Project Description:

The living wage concept has a longstanding tradition, dating back from Plato and Aristotle in ancient Greece, to Adam Smith and to the constitution of the ILO in 1919 (Anker, 2011). The Universal Declaration of Human Rights (1948) recognizes a worker’s “right to a just and favourable remuneration ensuring for himself and his family an existence worthy of human dignity”. Nonetheless, today in global value chains, such as e.g. in the international garment industry, wages are often too low to safeguard the well-being of workers and their families. One reason for that lies with legal minimum wages in developing countries that are often far below a living wage level and in a downward spiral. Against this background, in the recent past, civil society has started calling on multi-national enterprises (MNEs) to voluntarily raise wages in their value chains to a living wage level. However, even if MNEs are motivated to take action on too low wages at the other end of the supply chain, they are faced with challenges of various kinds and simply do not know how to. The research questions drawn from here and to be attempted to be answered in this research project are the following: In how far are MNEs responsible and legitimized for the establishment of living wages in global value chains? What are the obstacles to living wage implementation in global value chains? What role do MNEs have in overcoming them?

While the century long living wage debate has elaborated intensively on living wage calculation (e.g. Anker, 2006, 2011; Brenner, 2002; King, 2016; Miller, 2013), living wage implementation has been neglected in the literature. Also, research focus has so far mainly stayed with the developed world (UK, US, New Zealand), leaving out developing countries (Werner & Lim, 2016). While the living wage debate has been given much attention in the fields of economics, geography, sociology, and social policy, the concept of a living wage remains undertheorized in business ethics literature, leaving a need for research concerning the role of business (Werner & Lim, 2016), and especially MNEs, with regards to living wages.

This research project aims to address this research gap. It draws upon research on Political Corporate Social Responsibility (Scherer & Palazzo, 2007, 2011) and the governance of global value chains (e.g. Gereffi et al., 2005; Barrientos et al., 2011; Gereffi & Lee, 2016) to first theoretically define MNEs’ responsibility and legitimization for action on living wages in global value chains and then develop a comprehensive framework to assess the obstacles in living wage implementation and MNEs’ role in overcoming them. The newly developed framework is tested empirically within a qualitative case study of the international garment industry.

Key References:

Anker, R. 2011. Estimating a Living Wage: A Methodological Review. Geneva: ILO publications.

Gereffi, G., Humphrey, J., & Sturgeon, T. 2005. The governance of global value chains. Review of International Political Economy, 12(1): 78–104.

Gereffi, G., & Lee, J. 2016. Economic and Social Upgrading in Global Value Chains and Industrial Clusters: Why Governance Matters. Journal of Business Ethics, 133(1): 25–38.

Scherer, A. G., & Palazzo, G. 2011. The New Political Role of Business in a Globalized World: A Review of a New Perspective on CSR and Its Implications for the Firm, Governance, and Democracy. Journal of Management Studies, 48(4): 899–931.

Werner, A., & Lim, M. 2016. The Ethics of the Living Wage: A Review and Research Agenda. Journal of Business Ethics, 137(3): 433–447.

Presentation:

Stephanie Schrage (2016): Living Wages in International Supply Chains and the Role of Multi-National Enterprises, presented at the Doctoral Workshop preceding the 7th International CSR Conference at the Humboldt-Universität zu Berlin, Berlin 2016