In the current global labour market, there is a growing disconnect between productivity and economic growth on the one hand, and workers’ living standards and labour’s share of income on the other. As a result, an increasing proportion of workers remain trapped in in-work poverty, disproportionately affecting the Global South. As of April 2026, only 28 out of 186 countries had a statutory minimum wage above the lowest living wage threshold applicable in their national context. To address this structural impoverishment, the policy profile seeks to establish fair and living wages as universal normative and operational standards, ensuring that all workers, regardless of employment status, receive remuneration sufficient to secure a decent standard of living for themselves and their families. It aims to link wage-setting mechanisms to living wage requirements, ensuring that workers and their families can enjoy an adequate standard of living and effectively realise their economic and social rights. More specifically, the ILO adopted an agreed tripartite definition defining a living wage as “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 agreement also states that the estimation of living wages should follow a number of key principles, including the use of evidence-based methodologies and robust data, consultations with workers’ and employers’ organisations, transparency and public availability, and consideration of regional, local, socio-economic and cultural contexts. The implementation of living wages within broader wage-setting processes should therefore be evidence-based and aligned with the ILO’s key wage-setting principles. This includes strengthening social dialogue and collective bargaining, empowering wage-setting institutions, promoting gradual progression from minimum wages towards living wages, ensuring national and local ownership, and recognising the central role of the State.
Complying with these requirements for establishing a living wage and a fair remuneration would directly reduce poverty, decrease inequalities – including gender inequalities – expand social protection and support democratic processes around wage-setting. This proposal therefore contributes to the broader objective of eradicating poverty beyond growth by ensuring a fairer distribution of economic gains and advancing economies capable of guaranteeing decent living standards and dignified livelihoods for all without relying on perpetual economic growth.
