The idea that a strong capitalist economy comes at the expense of poverty is beginning to be challenged. Business Fights Poverty’s newest report is evident of that, proving that the most effective solution is to reshape business strategies. The introduction of living wages may be the spark of hope in the long-standing fight against world poverty.
The COVID-19 pandemic did well to deepen global poverty, further widening the gap between the rich and the poor. Rates of extreme poverty skyrocketed after four years of steady decline. 2020 saw 97 million more people falling into poverty. The World Bank now reports that extreme poverty is estimated to lie between 657 million and 676 million, in oppose to the pre-pandemic 2022 estimate of 581 million.
The pandemic most certainly cost mass unemployment, followed by a hangover that is seeing opportunities open up again. However, the relationship between financial stability and work is more complex than that. Poverty is not necessarily an outcome of unemployment - 630 million people are in working poverty, earning less than $3.20 per day.
“Minimum wages are often set too low for workers and the dependents in their households to escape poverty” – The Case for Living Wages
It is not a false claim that global capitalism currently strives through exploiting the larger portion of the population. Equally, nobody knows if it is realistic for the capitalist system to ever diminish as wished by many left-wing ideologies that demand equal opportunities for everyone everywhere. However, it is important to note that capitalism is not a set-in-stone system. In fact, its reshaping is vital to tackle the humanitarian crisis as well as the climate crisis on a faster and wider scale.
“The time for living wages is now” highlights Business Fights Poverty, reporting that the implementation of living wages should be seen as an opportunity, not a challenge. Living wages are defined as the necessary income to afford a decent standard of living for workers and their families. This standard includes all essential needs, including housing, food, water, health care, education, transport, clothing and coverage for unexpected events.
A decent quality of living comes hand-in-hand with a higher level of motivation, which comes hand-in-hand with improved performance and customer satisfaction. PayPal owes much of its recent growth to granting decent wages to all employees. As well as gaining a higher stream of income, the business spends fewer costs on managing in-work labour issues that mostly stem from low wages.
Furthermore, external sourcing companies and stakeholders often put thought into their financial investments. Modern society is blooming with sustainable trends and the awareness of social issues, especially after the COVID-19 crisis. An ethical business structure will naturally attract investors that intend to feed the bettering of society.
Whilst success rates are shown by larger businesses such as PayPal, the implementation of living wages remains a new and uncertain concept. An increasing number of pioneering organisations and businesses are developing methods and tools to create the most effective structure. Therefore, all businesses can seek support in the transformation.
It is definitely an exciting and hopeful new momentum. However, it is not an entirely new concept. Its history predates to 1914 when Henry Ford was thought to be a fool for doubling the workers’ wages and shortening their working hours. To his competitor’s surprise, the results were a boost in productivity, employee loyalty, and a titled role model of the business strategy. The birth of the five-day working week meant that more workers became customers with more leisure time to spend more money. A revolutionary economic boost came to being.
Living wages are a modern continuation of that mindset on a global scale. Bearing in mind that exploitation is heavily focused within developing countries with the largest populations, the turnaround may be revolutionary for businesses, as well as the improved quality of living for countless people.
A positive future for businesses, workers, and society as a whole has never seemed this realistic. This realism equally comes hand-in-hand with a new realism to tackle the climate crisis as the humanitarian crisis and the climate crisis can only grow together.
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