5 steps to calculating a Living Wage

published 27-08-2014 13:05, last modified 27-08-2014 13:05
The Asia Floor Wage is a way to calculate a living wage that can be applied across all countries in Asia. By calculating the living costs across the region a wage rate is reached that would allow garment workers to earn enough lo live on in their respective countries, whilst preventing brands from moving elsewhere for lower wages.

There are 5 steps to calculating the Asia Floor Wage

Step 1 - Food basket research by country, calculates the cost of food to ensure an adult is able to afford a standard intake of 3000 calories a day. For the Asia Floor Wage it is assumed that food costs account for 50% of expenditure. 

Step 2 - Non food costs including housing, clothing, healthcare (including maternity and child care), education, fuel, transport and savings are included. 

Step 3 - It is taken that a worker is not just supporting themselves.  On average it has been calculated in Asia that a worker is supporting themselves and the equivalent of two other adults - a child is counted as half an adult. Therefore the costs calculated above are times by 3. 

These steps are calculated in the local currency.

Step 4 -  In order to gain a regional living wage, the calculations are then converted into Purchasing Power Parity dollars (PPP$) this is an imaginary currency used by the World Bank which allows us to compare the standard of living between countries, regardless of the national currency.

Step 5 - Takes the PPP$ figures across the region and calculates an average, this average figure is then converted back to local currency.