KUALA LUMPUR, 1 October 2024: A new report highlights the need for finance professionals to champion living wages as a key factor in reducing inequality, advancing human rights, and promoting sustainability. Produced by ACCA, Shift, and Forvis Mazars, the report also reinforces findings that paying a living wage not only boosts productivity and reduces staff turnover but also enhances economic stability.
The report, ‘A living wage – Crucial for sustainability’, urges finance and accountancy professionals to address wage inequality and play a pivotal role in driving sustainable business practices. It stresses that without prompt intervention, wage disparities will continue to undermine economic and social systems globally, including in the Asia-Pacific (APAC) region.
Using the insights from over 1,000 survey respondents across 93 countries and discussions with more than 50 finance and business professionals, the report provides compelling evidence for the socio economic multiplier effect of living wages. It finds that paying a living wage benefits not only workers but also employers, economies, and governments.
Paying workers below a living wage is inconsistent with preserving and enhancing the value of human capital. Business and investor initiatives involving leaders from across all regions are increasingly highlighting the importance of paying living wages to reduce inequalities and the related risks to societies, economies and financial systems. Yet only 33% of Malaysia-based respondents felt that it was a responsibility which extended to their first-tier suppliers and even less beyond this.
The report highlights the undeniable link between living wages and sustainability, with 87% of Malaysia based survey respondents recognising this connection. Living wages reduce inequality, boost economic stability, enhance business resilience, support human rights, strengthen supply chains, and meet growing regulatory and investor demands for socially responsible practices.
Helen Brand OBE, Chief Executive of ACCA, stated: “Accountancy and finance professionals are held to the highest ethical standards. The right of all employees and contractors to a living wage is an ethical responsibility and as a result finance professionals have a unique role and opportunity to drive it as a core part of their sustainability activities.”
Caroline Rees, President and Co-founder of Shift, emphasised: “A living wage is a fundamental human right. Organisations’ responsibility under international standards to respect human rights means paying workers in their own organisation adequately, and using their purchasing practices and business relationships to advance living wages also for workers in their value chains. Change doesn’t happen overnight, but chief financial officers can and should drive demonstrable progress on this crucial issue.”
Richard Karmel, Managing Partner – London, Forvis Mazars, added: “Organisations face significant transitions as their business models seek to become more sustainable. The inability to pay a living wage throughout a value chain, including in one’s own organisation, can only bring into question whether that business model is sustainable. Now is the time to critically appraise the viability of these business models and to make tough choices with a human capital focus.”
A Malaysian Perspective
In Malaysia, addressing wage disparities is particularly critical, given the country’s commitment to reducing inequality as envisioned in the Ekonomi Madani framework, which aims to elevate the dignity and status of the nation with two main focuses: restructuring the economy to make Malaysia a leader in Asian economies to ensure that the enlarged wealth is benefitted equitably by the Rakyat. By advocating for living wages, finance professionals in Malaysia can help align business practices with national development goals.
The report urges finance professionals across to elevate living wages to board-level discussions, integrate them into sustainability strategies, and lead by example in their value chains, starting with Tier 1 suppliers. Regulatory frameworks like the European Sustainability Reporting Standards (ESRS) and the Corporate Sustainability Due Diligence Directive (CSDDD) are increasingly emphasising living wages. Finance professionals in the APAC region, including Malaysia, must prepare to meet these growing demands for socially responsible practices, ensuring their organisations are well-positioned for future regulatory requirements.
Full report can be read online here: https://stories.accaglobal.com/living-wage/index.html
