The Asia Floor Wage Alliance base their calculations on the following assumptions:

  • A worker needs to be able to support themselves and two other “consumption units”. (1 consumption unit = 1 adult or 2 children)
  • An adult requires 3,000 calories a day to be able to carry out physical labor.
  • In Asia, food costs account for half of a worker’s monthly expenditure; and non-food for the other half.

The Asia Floor Wage must be earned for a work-week of maximum 48 hours, not including bonuses, allowances or benefits.

The Asia Floor Wage is calculated in PPP$ – Purchasing Power Parity $, which is an imaginary World Bank currency built on the consumption of goods and services by people, allowing the standard of living between countries to be compared regardless of the national currency.

Asia Floor Wage is revised periodically by conducting Fresh Food basket surveys, and within intervening years by the use of a formulation based on the Consumer Price Index.

The latest Asia Floor Wage figure came out in 2020 and is valid for a period of 2-3 years. The figure is PPP$ 1420.

Click here to see how this translates to local currencies.

Living Wage calculations outside of Asia

The Asia Floor Wage calculation cannot be simply applied to other regions as some of the assumptions do not apply.  For example, food costs account for half of the income. This is the case in Asia where food costs are relatively high and standards of living such as housing are very low. However, in other regions such as Eastern Europe, food costs are relatively lower when compared to housing.

Six 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 3,000 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.