A new report highlights the need for finance professionals to champion  living wages as a key factor in reducing inequality, advancing human rights, and promoting sustainability.  Produced by ACCA, Shift, and Forvis Mazars, the report also reinforces findings that paying a living wage  not only boosts productivity and reduces staff turnover but also enhances economic stability.

The report, ‘A living wage – Crucial for sustainability’, urges finance and accountancy professionals to  address wage inequality and play a pivotal role in driving sustainable business practices. It stresses that  without prompt intervention, wage disparities will continue to undermine economic and social systems  globally, including in the Asia-Pacific (APAC) region. 

Using the insights from over 1,000 survey respondents across 93 countries and discussions with more  than 50 finance and business professionals, the report provides compelling evidence for the socio economic multiplier effect of living wages. It finds that paying a living wage benefits not only workers but  also employers, economies, and governments.  

Paying workers below a living wage is inconsistent with preserving and enhancing the value of human  capital. Business and investor initiatives involving leaders from across all regions are increasingly  highlighting the importance of paying living wages to reduce inequalities and the related risks to societies,  economies and financial systems. Yet only 33% of Malaysia-based respondents felt that it was a  responsibility which extended to their first-tier suppliers and even less beyond this. 

The report highlights the undeniable link between living wages and sustainability, with 87% of Malaysia based survey respondents recognising this connection. Living wages reduce inequality, boost economic  stability, enhance business resilience, support human rights, strengthen supply chains, and meet growing  regulatory and investor demands for socially responsible practices. 

Helen Brand OBE, Chief Executive of ACCA, stated: “Accountancy and finance professionals are held  to the highest ethical standards. The right of all employees and contractors to a living wage is an ethical  responsibility and as a result finance professionals have a unique role and opportunity to drive it as a core  part of their sustainability activities.” 

Caroline Rees, President and Co-founder of Shift, emphasised: “A living wage is a fundamental human  right. Organisations’ responsibility under international standards to respect human rights means paying  workers in their own organisation adequately, and using their purchasing practices and business  relationships to advance living wages also for workers in their value chains. Change doesn’t happen  overnight, but chief financial officers can and should drive demonstrable progress on this crucial issue.” 

Richard Karmel, Managing Partner – London, Forvis Mazars, added: “Organisations face significant  transitions as their business models seek to become more sustainable. The inability to pay a living wage  throughout a value chain, including in one’s own organisation, can only bring into question whether that  business model is sustainable. Now is the time to critically appraise the viability of these business models  and to make tough choices with a human capital focus.”

A Malaysian Perspective 

In Malaysia, addressing wage disparities is particularly critical, given the country’s commitment to reducing  inequality as envisioned in the Ekonomi Madani framework, which aims to elevate the dignity and status of  the nation with two main focuses: restructuring the economy to make Malaysia a leader in Asian economies  to ensure that the enlarged wealth is benefitted equitably by the Rakyat. By advocating for living wages,  finance professionals in Malaysia can help align business practices with national development goals. 

The report urges finance professionals across to elevate living wages to board-level discussions, integrate  them into sustainability strategies, and lead by example in their value chains, starting with Tier 1 suppliers. Regulatory frameworks like the European Sustainability Reporting Standards (ESRS) and the Corporate  Sustainability Due Diligence Directive (CSDDD) are increasingly emphasising living wages. Finance  professionals in the APAC region, including Malaysia, must prepare to meet these growing demands for  socially responsible practices, ensuring their organisations are well-positioned for future regulatory  requirements. 

Full report can be read online here: https://stories.accaglobal.com/living-wage/index.html

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