Wednesday, 6 February 2013

Living wage – Ecuador shows the way

In Ecuador where left-wing President Rafael Correa is standing for re-election, the government has introduced a minimum wage, and what they call a ‘Dignity’ wage for the private sector. Paying the national minimum wage is a legal requirement, but paying the Dignity (i.e. Living) wage is not.

Instead, it is a legal requirement for companies to pay the Dignity wage to all employees if they are to pay dividends to their shareholders.

This means that pressure is then redirected to company shareholders to ensure that their company is paying the Dignity wage, as a minimum, to all staff. Shareholders in search of dividends (or sale value) are then left to apply pressure to their own firms.

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