What does it mean?
Measuring is the critical first step in understanding where wage gaps exist. It involves identifying a credible living wage estimate, calculating the difference between actual remuneration and the living wage – also known as the living wage gap - and verifying data to ensure accuracy and build trust amongst supply chain partners. Accurate measurement establishes the baseline for planning and action.
Steps to take
Three steps to measuring wages across your supply chain.
1. Identifying a credible living wage estimate
To ensure confidence across supply chain partners and worker representatives, it is essential to ground wage gap measurement in a credible estimate.
2. Calculating living wage gaps
Once an estimate has been selected, the next step is to compare this with workers' current remuneration, including wages, bonuses, and in-kind benefits.
3. Verifying living wage gap data
Verification helps ensure that wage gap data is not only accurate but also trusted by internal teams, suppliers, worker representatives, and external stakeholders.
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We recommend and rely on the IDH guidelines on what remuneration components suppliers should include or exclude from their analysis, and which [living wage estimate] data providers offer reliable data. This is something very practical but very important for our suppliers . . . They need clear, aligned and recognised standards, and that is why they rely on the IDH Living Wage Roadmap. It helps them get started and even convinces their own internal stakeholders.
– L'Oreal
More and more of our suppliers are using the salary matrix to demonstrate to us that they have done the work according to the correct guidelines.
– L'Oreal