Living wages

Wages are the primary source of income for most workers around the world. Yet in many countries, they remain too low to cover the basic needs of workers and their families. Low wages weaken productivity, reduce consumer demand, and slow economic growth, undermining the sustainability of enterprises and economies that rely on a motivated and stable workforce.

Adequate wage-setting requires two equally important inputs: a clear understanding of the needs of workers and their families, and a sound assessment of the economic factors in which wages are set. The Tripartite agreement reached in 2024 places both at the heart of wage-setting processes and the ILO Wage Data Hub brings data on both workers' needs and economic factors together in one publicly accessible platform.

Building on this, the Living Wage Programme is the ILO's coordinated response to the global challenge of low pay. It supports governments, employers' and workers' organizations, enterprises, and other stakeholders in estimating and operationalizing living wages in a way that is evidence-based, nationally anchored, and aligned with ILO principles.

Needs and economic factors for adequate wage-setting

What is a living wage?

According to the conclusions of the 2024 ILO Meeting of experts on wage policies, including living wages, a living wage is “the wage level that is necessary to afford a decent standard of living for workers and their families, taking into account the country circumstances and calculated for the work performed during the normal hours of work”.

The living wage should be “calculated in accordance with the ILO’s principles of estimating the living wage […]”, and “achieved through the wage-setting process in line with ILO principles on wage setting.”
Estimating a living wage means translating the concept into a national monetary value to calculate what a decent standard of living actually costs for workers and their families in a given country or region. It requires a rigorous, evidence-based assessment of what workers genuinely need, grounded in household survey data and local prices and meeting a set of standards.

Estimates should be developed with the meaningful involvement of employers' and workers' organizations, so that the process is locally owned; be fully transparent, comprehensive, open to scrutiny, and based on robust, representative data; be regularly updated to reflect changes in the cost of living and consumption patterns; and be subject to independent technical review and validation.

Estimates should reflect the specific regional or local context, including the socio-economic and cultural realities that shape what a decent standard of living actually costs, while actively promoting gender equality and non-discrimination.
Operationalization is the process of implementing living wage estimations into national wage-setting systems and strengthening the institutions and processes through which wages will be determined. Balancing the real needs of workers and their families with the economic realities of enterprises and labour markets includes factors beyond wage-setting mechanisms to ensure higher productivity results in wage growth.

Throughout this process, it is key to strengthen collective bargaining and tripartite social dialogue as the primary vehicles for wage setting, and to consider statutory minimum wages from which to work progressively toward living wage levels over time.

Operationalization must be owned and led at the national and local levels, with the participation of employers' and workers' organizations; must be grounded in reliable, transparent data on wages, prices, productivity, and labour market conditions; and must address the deeper structural factors that keep wages low: informality, low productivity, weak labour market institutions, and the unequal distribution of value along global supply chains.