WHAT IS A ‘LIVING WAGE', AND HOW DO WE DEFINE IT?

There's a fine balance between paying fairly, preserving jobs, and maintaining economic competitiveness

BRYDEN MORTON and CHRIS BLAIR

THE CONCEPT of a living wage' has gained much attention in recent years, spurred on further by the economic shockwaves caused by the COCID-19 pandemic.

There have been many views expressed in terms of what constitutes a living wage, and how it should be calculated. Some believe it can be calculated using a few fundamental economic data points, while others believe that more attention should be paid to other, nonremuneration aspects such as number of dependents and number of income earners per household.

In the humanistic approach, individuals are viewed holistically as human beings who know what they need, and define what constitutes a decent life for themselves. This approach seeks to go beyond the purchasing power element of a living wage, seeking to evaluate social elements of the individual's life as well (such as standard of living).

Other, more quantitative methods include regression modelling, purchasing power parity, and cost of living analysis that treat individuals as units that are measured against a set of criteria to determine the living wage. The quantitative approaches tend to be insensitive to individual considerations.

The humanistic approaches provide more understanding of the unique environment faced by each person. Computationally, such a methodology would prove tedious and even more challenging to execute-as a country such as South Africa, that has equal pay for work of equal value laws, does not make provision for outside-of-work circumstances when determining fair pay in the workplace.