Overview
A living wage is defined as the remuneration received for a standard workweek by a worker in a particular place that is sufficient to afford a decent standard of living for the worker and their family. Unlike a legal minimum wage, which is set by government mandate and often fails to cover basic costs of living, a living wage must be enough to meet essential needs, including food, water, housing, education, healthcare, transportation, and clothing, while providing for unexpected events and a small amount of discretionary income.
Ensuring payment of a living wage is a critical component of the people pillar in Good On You’s sustainability assessment. It addresses the systemic gap between legal requirements and the actual cost of a dignified life, particularly for lower-paid non-executive staff and supply chain workers who represent the highest levels of labour risk.
Industry verticals: Fashion, Beauty, Services, Retailer
Applicable for: small and large brands
What is assessed?
Good On You evaluates two primary components regarding living wages: methodology and outcomes.
Living wage methodology
This item assesses whether a brand has adopted a formal, recognised definition of a living wage. High scores are awarded to brands that align with credible, evidence-based frameworks rather than using the term "living wage" interchangeably with "minimum wage". Recognised benchmarks include:
The Global Living Wage Coalition (Anker Methodology): Considered a gold standard for calculating location-specific needs
The International Labour Organization (ILO): Focuses on levels necessary for a decent standard of living based on country circumstances
The Asia Floor Wage: A specific regional benchmark often used in the fashion industry
Living wage outcomes
This item measures the actual implementation and verification of wage payments. Assessment varies by vertical but generally focuses on:
The percentage of workers (eg 10%, 50%, or 100%) at specific production stages or within direct operations who are verified to receive a living wage
Whether the brand discloses the specific wage data used as a reference point
Participation in multi-stakeholder efforts like Action on Living Wages (ACT) or specific projects to close "wage gaps"
Assessments in industry verticals
Fashion and beauty
In product-based verticals, the assessment is heavily weighted toward the supply chain, as most labour is outsourced to external manufacturers.
The supply chain is broken into three stages for assessment:
Final production (Stage 3): Assembly, such as Cut-Make-Trim (CMT)
Second production (Stage 2): Processing raw materials into inputs (eg fabric spinning, dyeing, or ingredient refining)
Primary production (Stage 1): Raw material sourcing, such as cotton farming or mineral mining
Services
The Services methodology shifts focus significantly toward direct operations and contractors. Assessment focuses on non-executive workers and employees of contractors (eg cleaning or security staff).
Retailer
Retailers face a dual assessment covering both their internal staff and the supply chains of the products they sell.
Retailers are assessed on the proportion of:
Non-executive workers in their own retail operations receiving a living wage
Supply chain workers for their private-label or third-party products receiving a living wage
Disclosure and data sources
To receive credit, brands must move beyond vague wage commitments in Codes of Conduct. Clear disclosure includes:
Stating that the brand requires a "living wage" and providing a link to the specific methodology (eg Anker) used to calculate it
Publicly sharing the results of comparisons between current wages and living wage benchmarks
Disclosing the percentage of facilities where wage levels have been audited and verified
Confirming membership in initiatives like ACT or the Fair Wear Foundation, which provide third-party oversight of wage projects
Relevance for different brands
Small brands
May be rewarded for demonstrating a living wage is paid despite an absence of methodology. For example, if they state that the workers earn 5x the local minimum wage and that, having spoken to the supplier and workers, they believe it is sufficient to meet a living wage.
Large brands
Expected to have sophisticated reporting, including specific targets to close wage gaps by set deadlines (eg a 2030 target). Large brands must disclose whether they are on track to meet these targets.
Other practices that contribute to the score
Some practices assessed in other sections of the methodology score points within this area. These reflect actions such as certifications or broader business practices that have sustainability implications beyond just this area.
The exact practices that score in this area vary by industry vertical and are described in the articles linked below:
Best practice and common pitfalls
Fundamentals for high performance
To be a leader in this area, a brand should:
Adopt a strong living wage definition and methodology
Achieve 100% coverage at the final production stage as a baseline
Collaborate with unions and collective bargaining groups to ensure worker voices are part of the wage-setting process
Common pitfalls
Many brands cite compliance with local minimum wages as evidence of paying a “living wage”. Legal minimums are almost universally lower than living wages.
Disclosing that a "fair wage" or "decent wage" is paid without defining the calculation method. This results in a low score
Stating it pays living wages when only a tiny fraction of the workforce is covered (eg 1 out of 100 suppliers) is considered insufficient for a high rating