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Four Lessons: Implementing a Living Wage for the First Time

Boldr Living Wage Bcorp

“A rising tide lifts all boats” is a metaphor that means when a community shows material positive improvement or grows, everyone benefits. The same way a rising tide in the ocean raises all boats, a growing economy or company is meant to benefit everyone in it, regardless of their specific circumstances. This was the kind of upliftment we envisioned when we made it our goal to introduce a living wage.

However, when we set out on a mission to pay each team member a living wage, there were a couple of knock-on effects that we did not anticipate. While these learnings prepared us for what we can expect, it did not derail our journey towards achieving a living wage in all the countries we operate in.

“All team members will be paid a living wage by the end of 2023” 

This was the goal we set  at the beginning of the year. In an industry that historically kept wages as low as competitively possible, we committed to paying wages that enabled all team members to live dignified lives. We studied all the approaches and methodologies for determining a living wage. Having teams in Manila, Tacloban, Cape Town, Hazyview, and Merida, where readily available living wage baselines have yet to be established, added to the complexity.

After two years of research, we decided to execute the first step of our phased approach, which was to roll out a living wage for our Philippine team members. We adjusted the salaries of team members who we found were earning below the prescribed living wage. This moved a total of 9 percent of our total team size in the Philippines into a living wage. 

To put this change in perspective, the average salary of an entry-level BPO worker in the Philippines is PHP 15,407 or USD 282. This hovers minimally above the national minimum wage which amounts to PHP 12,540 or USD 229.50 at PHP 570 or USD 10.43 per day for a full month of work. BPOs also hire service personnel and custodians who are typically paid the minimum wage and given the nature of their work, do not have a lot of options for upward mobility. Both the average entry level salary and the minimum wage fall short of the prescribed living wage which is PHP 25,000 or 457.53 by nearly 50 percent. 

S1 4L Living Wage Thumb

This means, both entry-level and minimum wage earners earn half of what they need to live a dignified life in the Philippines. When we looked at our Philippine team members who were not yet earning a living wage, we got very excited about the impact we get to have by adjusting these team members’ salaries to a living wage. We are proud to be the first BPO in the Philippines to implement a living wage, and this initiative came with a wealth of lessons. Here are four crucial lessons we learned from our recent experience:

Communicate all the practical changes related to a living wage roll out

As with any kind of organizational change, a living wage is essentially a form of change management with implications to a company’s resources, but more importantly, the expectations and understanding of the team members involved. Eager to start with our dream goal of paying a living wage, the adjustment was implemented before our teams received the appropriate context behind the change. Understandably, this led to a series of clarifying questions from affected team members.

The key takeaway from this experience is to communicate the changes related to a living wage early and intentionally to every stakeholder involved. Communicating the practical implications of moving team members to a living wage reduces ambiguity and leaves less room for misinterpretation.

Anticipate the impact of introducing a living wage to other salary bands and future hiring

We learned that establishing a living wage floor not only impacts the layer of team members who need to be moved to a living wage but also affects the next layer or salary tier level. Closing the wage gap for non-living wage earners must consider the valuation of the roles that follow or are close to the living wage baseline. This means that the change required us to revisit and even adjust the salary band above the living wage to normalize the differences between the two bands. The positive outcome of this unanticipated knock-on effect was that another 6 percent of our team will be able to benefit from the living wage adjustment, bringing the total share of impacted team members to 15 percent of our Philippine workforce. 

Our key takeaway from this is that forecasting the costs of implementing a living wage in our next regions will factor in adjacent salary bands. By extension, a living wage change impacts future hiring decisions, particularly entry level roles that will be impacted because the starting rates are expected to be higher than market rates. Practically, this change will reflect on the salary rates posted on job boards. It is crucial that the living wage consideration is communicated as the rationale behind this salary point which means ensuring alignment with the hiring team on this initiative is key.

Continue creating awareness and education about the living wage

Empowering our teams with an understanding of our commitment to a living wage is vital. This means continually advocating and communicating the impact of a living wage through real world examples that are relatable. Some of the practical ways we’re doing this is by holding forums for team members to ask questions, creating and disseminating explainers and content that differentiate concepts such as living wage and minimum wage, simplifying the methodology and breaking down living wage to its component parts in terms of what expenses are accounted for.

Involve your clients in your living wage journey and milestone

It is essential to explain the living wage concept to your clients and to help them understand why it’s important for their extended teams. Creating awareness for clients and giving them the opportunity to celebrate this with their teams can have three positive outcomes:

  • Setting an example of how clients can implement a living wage in their own context
  • Creating more transparency with regard to our salary setting practices
  • Establishing a strong case for considering a living wage in present and future pricing models

Involving clients in one’s living wage journey means sharing the outcomes and stories that come out of implementing a living wage. Let them know how your team members are doing and how paying a living wage has impacted their lives. Keep them updated on any changes or improvements you make to your business as a result of paying a living wage. Involving clients in a living wage decision can be an excellent way to build trust, transparency, and support because it demonstrates how we value their opinions and are committed to making a positive impact on your team members’ lives and their community.

Closing Thoughts

Implementing a living wage is not a straightforward process and does not end with having all team members on this wage level. This change was the culmination of nearly two years of research and analysis yet its practical application taught us more and will serve as a guide for the next countries where we will be rolling out a living wage. The critical lesson that this experience has reinforced is that even well-intentioned initiatives require all the elements of proper change management: early and deliberate communication, foresight into the operational impact a policy such as living wage has on succeeding pay grades and recruitment strategies, ongoing awareness building and dialogue, and ensuring that clients are involved and have the opportunity to celebrate this decision.

We are committed to continuously refining our living wage methodologies and baselines. We have a formal partnership with the Ateneo De Manila University in the pursuit of building our own framework for evaluating the living wage annually for our Philippine teams. This is a pioneering piece of research as it is slated to be the first BPO-focused living wage designed to guide other BPOs to implement a living wage in their own companies and drive the much needed change in the industry. In South Africa, we are connected to the University of Cape Town and are connected to the Living Wage Coalition of companies which are also committed to or have already rolled out a living wage in their contexts. We have also begun our preliminary research work as well with our teams in Mexico, through our partnership with the Anker’s Institute.

Looking to start your living wage journey?

For any company, outsourcing or otherwise, that is considering or are going through their own living wage journey or is curious about the process, we are excited to share our experience or be a valuable resource and partner. Boldr is committed to driving change in these developing economies and being a champion of the B Corp movement. Should you or your team have any questions about implementing a living wage at your business and understanding the value this can unlock, or if you are curious about becoming a B Corp, creating a Theory of Change within your business, or you need a thought partner to help jumpstart your sustainability efforts, email me at gguevarra@boldrimpact.com.

Glo Guevarra is the Impact Manager at Boldr and she holds a postgraduate degree in Labor, Activism, and Development at SOAS University of London.

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