Living wage benchmark
A living wage benchmark is a location- and time-specific estimate of the remuneration needed for a worker and family to attain a decent standard of living during normal working hours. It applies an explicit methodology and assumptions to living costs. A benchmark informs comparison and wage-setting; it is not itself a universal wage or legal entitlement.
In simple terms
A benchmark translates the Living wage concept into an estimated amount for a defined geography and period. Its method specifies household size and earners, normal working hours, food, housing, healthcare, education, transport, taxes, a margin for unforeseen events, data sources, and update rules. The ILO provides an agreed living-wage concept and principles for estimation. IDH’s recognition process evaluates benchmark methodologies, but IDH is a multistakeholder initiative rather than an intergovernmental standard setter. Users should disclose the method and date and compare like-for-like wage components.
Why it matters
For Ethical trade and procurement programs, a credible benchmark can show the gap between current remuneration and the estimated cost of a decent local standard of living, informing wage dialogue and improvement plans. A single global number would conceal major geographic and household differences. Outdated prices, opaque assumptions, or counting excessive overtime and conditional benefits can make an apparent comparison misleading.
Example
A buyer selects a benchmark for the workers’ specific region, records its price year and family assumptions, updates it for inflation only as the method permits, and compares normal-hours remuneration on a consistent basis. It discusses the resulting gap with employers and worker representatives and examines purchasing practices. It does not present the benchmark as the statutory minimum wage.
How it differs
Living wage
Living wage is the underlying context-specific wage concept; a living wage benchmark is a dated, location-specific estimate produced by a stated methodology to operationalize that concept.
References
Current status
- As of
- Issuer
- International Labour Organization and IDH
- Jurisdiction
- Global guidance with location-specific estimates
- Instrument or version
- ILO 2024 conclusions and IDH recognition process (2020)
- Status
- The concept follows the ILO’s 2024 living-wage conclusions; the detailed benchmark-method recognition source is IDH’s multistakeholder process rather than an intergovernmental standard.
Applicability: A benchmark applies only to its stated place, household assumptions, working-time basis, data period, and methodology. Cost changes can make the amount stale, and the estimate does not replace legal or collectively bargained wage-setting.