6 steps to calculating a Living Wage

Step 1 – Each country conducts a Food Basket survey with garment workers, using an “AFW Food Basket Template.” The Food Basket is calculated on the basis of 3000 calories being consumed by one adult per day. The daily cost is then multiplied by 30 to get the monthly food cost; and then again by 3 units of consumption to arrive at Food Cost for a family for a month.

Step 2 – Calculate the Non Food Expenditure. As AFW calculations maintain a 50%-50% weightage between food and non-food items, the food expenditure amount (for each specific country) can be considered to also be the amount that workers spend on non- food items.

Step 3 –Add up the food and non-food expenditure to estimate the AFW for each country.

Step 4 –  These country-wise figures are then converted to PPP$ using the PPP Conversion Factors decided by the World Bank. This results in a range of country- wise PPP$ figures.

Step 5 – In order to come up with a regional AFW PPP$ figure, the unions in AFWA arrive at a consensus on a specific PPP$ figure from the range. This becomes the official AFW figure in PPP$.

Step 6 – Convert the common AFW Figure in PPP$ back to local currencies to get the AFW for specific countries.