The document provides a summary of global wage trends based on data from the United Nations and International Labour Organisation. Some key points include: - Global wage growth decelerated in 2013 compared to 2012 and has yet to rebound to pre-crisis rates. - Wage growth has been driven mostly by emerging and developing economies, with China alone accounting for almost half of global wage growth. - Growth in wages in developed economies has remained flat. - Between 1999-2013, labor productivity growth in developed economies outstripped real wage growth and labor's share of national income. - Average wages in emerging economies are slowly converging towards those in developed economies.

1. ASSESSMENT OF THE
GLOBAL WAGE TRENDS
Fair Wages and Creating Shared Value
Abstract
In a world of uncertainty, answers are not always easy or clear-cut.
Governments and Corporations can create value for society and contribute to
solving global problems in a wide variety of ways, from developing
implementable strategies spanning across food security, minimum wages
controlling climate change that share the benefits of commercial activities
more broadly, delivering social, environmental and financial returns.

2. pg. 1
Executive Summary
It has been a subject of constant debate about the role of wages in world economics in recent years. In
a firm, an increase or decrease in wages affects production costs, profitability, sustainability and
competitiveness. For a country, the net effect of wages depends on the relative magnitudes of the
effects of wages on household consumption, investment and net exports. In the Eurozone we have
observed that the concerns over deficits in aggregate demand due to insufficient household
consumption have put pressure on wages, and many of those concerned have surmised that the decline
or stagnation of wages is a direct factor for increasing risk of deflation. However, in some emerging and
developing economies, minimum wages are a key component of overall strategies to reduce poverty
and inequality.
Here are few observations on wages from United Nations and International Labour Organisation
regarding global trends in wage growth.
 Global wage growth decelerated in 2013 compared to 2012, and has yet to rebound to pre-
crisis rates.
 Global wage growth driven mostly by emerging and developing economies.
 Global wage growth contributed by China is almost half of global growth.
 Growth in wages in developed economies has remained flat.
 Between 1999 and 2013, labor productivity growth in developed economies outstripped real
wage growth, and labor’s share of national income.
 Average wages in emerging and developing economies are slowly converging towards average
wages in developed economies.
Globally if too many countries pursue wage moderation policies then there is a risk of negative outcome.
In the current environment, there is persisting risk of global economy sliding back into a low-growth trap.
Considering this risk, higher wage growth is highly recommended in those countries where wages are
lagging behind productivity growth.
Our proposal is to implement a Systematic Tax Exemption for the businesses along with the
implementation of the increased minimum wage. This system will envisage a periodic increase in
minimum wage policy by the government along with a tax exemption that will mitigate the effect of
increase in minimum wage. However this system also ensures a proportional decrease in the exemption
throughout the period of the current policy. The new exemption comes to effect with the implementation
of the next policy. This system will ensure minimum inflation which does not affect the demand and
hence prevents unemployment. This policy will also encourage employment and hence will be a major
driver in reducing poverty.

3. pg. 2
Introduction
Sustainability, today has become a part of the policies of a country and
corporations both public and private sector and is playing an
increasingly central role in engaging the stakeholders in some of the
world’s biggest social, environmental and governance problems. In the
past two decades we have seen that corporate sustainability
performance has improved, with companies and corporations
becoming actively engaged in issues beyond their responsibility to
respect human rights, labour, the environment and anti-corruption. UN
Global Compact and its initiatives has definitely shown the path
towards structuring the policies towards creating shared value.
Creating Shared Value ranges from poverty alleviation to the fight
against corruption or to eradicate devastating diseases such as
malaria and HIV-AIDS1
. At the same time, the complexity of today’s
social, environmental, governance and business challenges is rising.
Conventional economic analysis states that increasing the minimum
wage reduces employment in two ways.
a. First, increase in wages increases the cost of goods sold and
services. These costs definitely get passed on to the
consumers. This results in higher prices, and the higher
prices, in turn, effects the demand for the goods and services.
The reduced demand results in reduced production and lower
employment. This is known as a scale effect, and it reduces employment. This employment
crisis hits both low-wage workers and higher-wage workers.
b. Second, a minimum-wage increase causes a
relative rise of cost of low wage workers compared
to other necessary inputs. Employers use
machines, technology, and more productive higher-
wage workers to produce goods and services. Due
to increase in minimum wages, some employers
reduce their use of low-wage workers and instead,
shift towards the other inputs. That is known as a
substitution effect. It reduces employment among
low-wage workers but does increase employment
among higher-wage workers.
Economists at the National Institute of Economic and Social Research2
estimate that a minimum wage
set at £3.70 an hour for everyone over the age of 25 would, in the long run, cost some 250,000 jobs.
After all, logic says that if you raise the price of something, people will buy less of it. 3
1
New Paths to Performance: UN Global Compact.
2
NIESR aims to promote, through quantitative and qualitative research, a deeper understanding of the interaction of economic
and social forces that affect people's lives, and the ways in which policies can improve them. http://niesr.ac.uk/
3
Minimum Wage: The minimum wage's seven dark secrets, CHRIS DILLOW, Investors Chronicle, May 15, 1998
“For the most part,
businesses have associated
their social investment
strategies with traditional
philanthropic giving, that
is, the distribution of
wealth already created
without any expected
social or financial return.
The landscape is however
changing. Increasingly,
business is looking to
implement social
investment strategies
across a range of initiatives
that are aligned with their
commercial objectives.” —
Shaun Cannon, Chief
Executive Officer,
Principles for Social
Investment Secretariat
Minimum Wage
Jobs for low-income
workers

4. pg. 3
Minimum Wage
A minimum wage is defined as the lowest monthly remuneration that employers may legally pay to the
workers. Another way of looking at it is the lowest wage at which workers may sell their labour. However
this selling price is not dependent on the market. Usually, the parameters to set minimum wage are
selected such that it minimizes the loss of jobs while maintaining international competitiveness of
domestic industries. The primary indicators used are:
 General economic conditions in the country as measured by the GDP
 Inflation
 Labor supply
 Demand situation
 Wage levels
 Wage differentials
 Growth in productivity
 Cost of doing business
 Living standards
 The prevailing average wage rate in the country
The parameters stated above follows the format laid out by UN Global Compact SA 8000 which states
that
Wages paid for a standard work week must meet legal and industry standards and be
sufficient to meet the basic needs of workers and their families and to provide some
discretionary income.4
This macroeconomic outlook is not new, however, after virtually disappearing from policy debates,
minimum wage imbalance has received new attention in recent years. Many countries are trying to
reduce differences between their imports and exports. Wage policies and its global trends play an
important role in this equation.5
Fair Trade Certification6
The central theme of Fair Trade is the minimum price, which is intended to meet a broadly determined
living wage in the sector (originally set in accordance with the data of the International Coffee
Organization) and to cover the average costs of sustainable production including the minimum wage
requirements. The Fair Trade buyer agrees to pay producers at least the minimum price when the world
price is lower, and to pay the world price when this is above the Fair Trade minimum.
In both situations, producers and traders are still free to negotiate higher prices on the basis of quality
and other attributes. This also helps to maintain the minimum wage floor limit.
4
UN Global Compact SA 8000
5
In countries with large current account deficits, where imports exceed exports, wage moderation may contribute to
rebalancing trade accounts. This can have a positive effect on aggregate demand and employment if the boost to the
competitiveness of exports is large. However, if wage cuts reduce domestic consumption by more than is offset by an increase
in exports, the result will be negative in terms of GDP growth, particularly if government spending is reduced at the same time.
In countries with large trade surpluses, higher wage growth can contribute to a rebalancing of demand towards domestic
household consumption and away from exports – with the effect on aggregate demand in these countries again depending on
the magnitude of the different elements of demand: UN Global Compact 2015.
6
The Economics of Fair Trade : Raluca Dragusanu (Harvard University), Daniele Giovannucci(Committee on Sustainability
Assessment),Nathan Nunn (Harvard University)

5. pg. 4
A look at the comparisons attributes of Wages and Fair Trade helps us to give a fair idea about the
two issues and how they are related in helping to maintain a balance between the fair wage and the
minimum wage.
While the Wage definition from ILO talks about the policies to decide the minimum wages, the Fair
Trade policies talks about the structure in a system thinking approach that addresses the problems of
today. Systems thinking7
, which is the process of understanding how things, regarded as systems,
influence one another within a whole is critical to address the issue of minimum wages since its affects
has direct effects on the economy.
7
Systems thinking - Wikipedia
What are wages?
Wherever possible, in this report wages are defined
according to the ILO definition of earnings adopted by the
12th International Conference of Labour Statisticians
(ILO, 1973).
(1) Direct wages and salaries for time worked, or work
done, cover: (i) straight-time pay of time-rated workers;
(ii) incentive pay of time-rated workers; (iii) earnings of
piece-workers (excluding overtime premiums); (iv)
premium pay for overtime, shift, night and holiday work;
and (v) commissions paid to sales and other personnel.
Included are: premiums for seniority and special skills;
geographical zone differentials; responsibility premiums;
dirt, danger and discomfort allowances; payments under
guaranteed wage systems; cost-of-living allowances; and
other allowances.
(2) Remuneration for time not worked comprises: direct
payments to employees in respect of public holidays,
annual vacations, and other time off with pay granted by
the employer.
(3) Bonuses and gratuities cover: seasonal and end-of-
year bonuses; additional payments in respect of vacation
periods (supplementary to normal pay); and profit-
sharing bonuses.
Earnings include cash earnings and in-kind payments, but
the two should be distinguished from each other.
There are also related concepts which are broader. For
example, while one element of labour cost is earnings, it
also includes other elements such as: food, drink, fuel and
other payments in kind, cost of workers’ housing borne by
employers; employers’ social security expenditure; cost of
vocational training; cost of welfare services (e.g. canteen,
recreational facilities); labour costs not classified
elsewhere (e.g. cost of work clothes), and taxes regarded
as labour cost (e.g. taxes on employment or payrolls). For
a detailed description of these elements, see ILO, 1966.
Source: ILO, 1973.
The goal of Fair Trade certification is to improve the living
conditions of farmers and workers in developing
countries. The process of certification covers number of
parameters, which are summarized below
1. Prices: Producers are guaranteed a minimum price for
the good, as well as an additional fair trade premium. The
price floor and premium are set separately for each good.
2. Workers: Workers must have freedom of association,
safe working conditions, and wages at least equal to the
legal minimum and regional averages. Child labor
(defined as a worker that is less than 15 years of age) is
prohibited.
3. Institutional structure: Farmers / workers must
organize as cooperatives, where decisions are made
democratically and with a transparent administration
that can effectively export their product and administer
the premium paid to the organization in an accountable
manner. For some products larger enterprises can become
fair trade certified. Here, joint committees of workers and
managers must be formed and democratically structured.
4. Environment: Certain harmful chemicals and GMOs are
prohibited. The environmental criteria are meant to
ensure that the members work towards including good
environmental practices as an integral part of farm
management by minimizing or eliminating the use of less
desirable agrochemicals and replacing them, where
possible, with natural, biological methods, as well as
adopting practices that ensure the health and safety of
the cooperative members and the community. Producers
must provide environmental reports summarizing their
impacts on the environment.
5. Stability and access to credit: Fair Trade buyers agree
to long-term contracts (at least one year) and to provide
advance crop financing to producer groups (up to 60%) if
it is requested.

6. pg. 5
Global Trends
The global economy contracted sharply between 2007 and 2009, recovered in 2010, but subsequently
decelerated as seen in the figure above. While growth rates after 2010 weakened across the globe, the
trends are better in the emerging and developing economies.
In the big economies around the world, the wage trends has followed the GDP trends. However, in most
of the economies the minimum wage is not indexed with the GDP. This is indicative of the tendency to
cut down minimum or fair wages with the economic downturn. This may not affect the skilled / high paid
labor force in a country but it definitely pushes lot of people below poverty line or below living wages.
Global wage growth decelerated in 2013 compared to 2012, and has yet to rebound to pre-crisis rates.
The relationship between wages, compensation, different deflators and labour productivity
Since wages represent only one component of labour costs, it may be more appropriate to compare gains in labour
productivity with increases in average compensation per employee (as opposed to wages). Compensation of employees
includes wages and salaries payable in cash or in kind and social insurance contributions payable by employers (CEC, IMF,
OECD, UN and World Bank, 2009, para. 7.42).
A second area of debate surrounds the most appropriate tool to be used to deflate wages or labour compensation: the
consumer price index (CPI) or the GDP deflator. The GDP deflator captures the change in prices of all goods and services
produced in the economy. In contrast, the CPI reflects the prices which affect consumers (i.e. the prices of goods and services
consumers buy). Thus, the GDP deflator and the CPI can differ, because the overall price of the basket of goods bought by
consumers is different from the overall price of all goods produced domestically. So which deflator is more appropriate in
calculating changes in real wages and/or labour compensation? It depends on the end-use of the analysis. When the
standard of living is being assessed, the CPI more accurately reflects changes in the purchasing power of consumers: this is
why the Global Wage Report uses the CPI to calculate its global and regional estimates for average real wage growth.
However, for enterprises, the relevant measure may be between productivity and labour compensation deflated by the
product price; in this case, the GDP deflator may be more appropriate (Feldstein, 2008).
A detailed study by the US Bureau of Labor Statistics corroborates this finding for the United States: it shows that while
these measurement issues do affect the exact estimates, they do not affect the overall conclusion that productivity grew
faster than wages (Fleck, Glaser and Sprague, 2011). There was also a similar finding for the United States in 2014 in the
Economic report of the President (USCEA, 2014).
-Global Wage Report 2014/15 by ILO
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
REALGDPGROWTH(%)
World Advanced economies Emerging market and developing economies

7. pg. 6
The following chart explains 2 things. First is a global estimate based on wage data for 130 economies
and the second is the global estimate excluding China. China, by virtue of its large number of wage
earners and high real wage growth, accounted for much of the global wage growth. In fact global wage
growth contributed by China is almost half of global growth.
As can be seen from figure above, global real wage growth dropped sharply during the crisis in 2008
and 2009, recovered somewhat in 2010 and then decelerated again. It has yet to rebound to its pre-
crisis rates.
Global wage growth driven mostly by emerging and developing economies.
Growth in wages in
developed economies has
remained flat. The chart
Annual average real wage
growth in the G20, 2006–13
shows estimates for the
whole of G20, for its
developed and its emerging
members. The countries of
the G20 contribute to about
75% of world GDP and
employs more than a billion
paid employees. It can be
observed that the average
real wage growth throughout
the period was driven by
emerging and developing
economies when compared
to developed economies average real wage growth rate which remained low or negative throughout the
period.
Between 1999 and 2013, labour productivity growth in developed economies outstripped real wage
growth, and labour’s share of national income.
2.1
2.4
0.5
0.7
1.4
0.1
1.3
1.1
2.8
3.1
1.2
1.6
2.2
1.0
2.2
2.0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Growth(%)
Global (without China) Global Linear (Global (without China)) Linear (Global)
Annual average global real wage growth, 2006–13
Note: Global wage growth is calculated as a weighted average of year-on-year growth in average monthly real
wages in 130 countries, covering 95.8% of all employees in the world.
Source: ILO Global Wage Report 2014/15
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
GROWTHRATE
AXIS TITLE
G20 - developed G20 - emerging G20
Annual average real wage growth in the G20, 2006–13
Note: The estimate for the G20 uses the methodology specified in Appendix I, but is restricted to
18 out of 19 individual countries for which data are available (Argentina identified some
inconsistencies in its wage series for some years and has been excluded).
Source: ILO Global Wage Report 2014/15.

8. pg. 7
Chart Trends in growth in average wages and labour productivity in developed economies (index),
1999–2013 shows that after
a narrowing of the gap
during the depth of the crisis
between 2008 and 2009,
labour productivity has
continued to outstrip real
wage.
A study of minimum wage issue in United States and the implications to increase it.8
The Congressional Budget Office (CBO) looked into two options for increasing the federal minimum wage to $10.10
in three steps and $9.00 in two steps from the current rate of $7.25.
8
The Effects of a Minimum-Wage Increase on Employment and Family Income: Congress of the United States Congressional
Budget Office
Real wage
index
Labour
productivity
index
100
103
106
109
112
115
118
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
INDEX(BASEYEAR=1999)
Trends in growth in average wages and labour productivity in developed
economies (index), 1999–2013
Note: Wage growth is calculated as a weighted average of year-on-year growth in average monthly real wages in
36 economies (for a description of the methodology, see Appendix I). Index is based to 1999 because of data
availability.
Source: ILO Global Wage Report 2014/15.

9. pg. 8
Effects of CBO’s Options on Employment
According to CBO’s central estimate, implementing the, $10.10 option would reduce employment by roughly
500,000 workers in the second half of 2016, relative to what would happen under current law. That decrease would
be the net result of two effects: a slightly larger decrease in jobs for low-wage workers (because of their higher
cost) and an increase of a few tens of thousands of jobs for other workers (because of greater demand for goods
and services).
Under the $9.00 option, employment would decline by about 100,000 workers in the second half of 2016, relative
to what it would be under current law, according to CBO’s central estimate9.
Measurement & Impact
At first glance, a country's minimum wage rate may look like a definitive starting point for compensation
planning. Upon scrutiny, however, global minimum wage rates raise more compensation and workforce
planning questions than they answer.
“Managed effectively, a minimum wage rate can reduce poverty and deliver significant societal and
economic benefits” World Bank economist Jan Rutkowski.
“Minimum wages are "an indicator of wage inflation. When the minimum wage increased by 5 percent
[in Brazil], we essentially increased our entire salary structure by 5 percent." says Adam Goldman, vice
president of human resources for Safariland, a Jacksonville, Fla.-based provider of law enforcement
and security products and services, and a subsidiary of BAE Systems.
The analysis and debates present a challenge because definitions of "living" and "fair" wages continue
to evolve and change; Different organizations follow different standards, which often requires
conversion of demands and expectations into local currency. Exchange rate fluctuations and
differences effect the average workweeks e.g. 40 hours in the United States equals 48 hours in Mexico.
A "living wage" refers to a threshold that allows workers and their families to have decent living
standards. Location-specific living wage standards usually identify a minimum amount of money
required to cover food, basic non-food items and other discretionary expenditures.10
Wage levels and wage-fixing frameworks provide a living wage floor for workers, while conforming to
national wage regulations (such as the minimum wage, payment of wages, overtime payments,
provision of paid holidays and social insurance payments). It must try to ensure proper wage
adjustments and lead to rational wage increments in the country (with regard to wage disparity, skills,
individual and collective performance, and adequate internal communication and collective bargaining
on wage issues).
The Proposal
9
How CBO Estimated the Total Effects of the Options on Employment
CBO’s central estimates that the $10.10 and $9.00 options would reduce employment by roughly 500,000 and 100,000 workers,
respectively, were based on four main factors. 1. The number of low-wage workers directly affected by the options. 2. The
responsiveness of the employment of low-wage workers to increases in minimum wages. 3. The change in the wages of directly
affected workers and 4. The increase in demand for goods and services caused by each option. To calculate the total effect on
employment, CBO multiplied estimates of the first three factors together for teenagers; did the same for adults; added the results;
and then added an amount to account for the fourth factor. To reflect the considerable uncertainty in estimating the total
employment effect, CBO also reported a range within which, in the agency’s assessment, there was about a two-thirds chance
that the actual effect would lie.
10
Minimum’ vs. ‘Fair’ vs. ‘Living’ Wages: Eric Krell: Society for Human Resource Management

10. pg. 9
By comparing these issues of basic needs, a framework for adjustment can be designed.
Our proposal is to implement a Systematic Tax
Easing Policy and Debt Rate Discount Policy for
the businesses which implement the new wage policy
along with the implementation of the increased
minimum wage by the governments. This system will
envisage a periodic increase in minimum wage policy
by the government along with a tax exemption that will
mitigate the effect of increase in minimum wage.
However this system also ensures a proportional
decrease in the exemption throughout the period of
the current policy. The new exemption comes to effect
with the implementation of the next policy. This
system will ensure minimum inflation which does not affect the demand and hence prevents
unemployment. This policy will also encourage employment and hence will be a major driver in reducing
poverty. This will be accordance to the UN Global to reduce world poverty by 2050.
Stakeholders Analysis
However to implement a framework we need to understand who are the stakeholders. At the national
level Governments, Financial markets, judicial machinery, National labor organizations, Commodity and
money market regulators are the key stakeholders for fixing the minimum wage framework. All these
stakeholders are assisted by Central and local Governments, Domestic and Foreign policy ministries,
Economic and Trade policy ministries, Technology development and policy, Big box Retailers and
Manufacturers, Local labour markets, Local labors unions and Consumers
A brief analysis of the stakeholders are given below.
Stakeholder Roles Responsibilities Interests Motivation Rank
International
Trade
Organization
To help
expand
world
trade
 Eliminate trade
barriers
 Provide strong
incentives for
domestic and global
trade growth
 Reduce import
tariffs
 Provide consumers
greater variety of
goods
 Stimulate job
creation as
industries sell
beyond borders
 Drive worker focus
on country
competitive
advantages
 Greater access to
modern
technologies,
healthcare,
commerce and
education
7
International
Labour
organization
Promoting
Jobs and
Protecting
people
 Promotion of rights
at work
 Encourage decent
employment
opportunities
 Enhance social
protection and
strengthen dialogue
on work-related
issues
 Give an equal voice
to workers,
employers and
governments
 Ensure that the
views of the social
partners are closely
reflected in labour
standards and in
shaping policies and
programmes.
 Drive labour
equality
 Generate labour for
majority populous
 Drive the poverty
divide among the
bottom layer of the
pyramid
6
Minimum Wage
Tax Exemption

11. pg. 10
Stakeholder Roles Responsibilities Interests Motivation Rank
Governments Administer
and govern
the
implement
ation of
the policies
Increase employment
rate
Reduce inflation
Increase GDP growth
Encourage industry
behaviour in minimum
wage adoption
 Improve the
employment rate
 Improve the
economy
 Encourage the
growth in industrial
production
 Enhance the quality
of life
 Better social life
and local
communities
 Growth in meeting
basic needs of its
communities
 Growth in income
and spending
 Growth in Trade
and manufacturing
1
Business /
Manufacturers
To
manufactu
re and
stimulate
the
economy
Provide better quality of
products
Reduce the costs
Enable better trade
practices
Support community
needs profitably
 To engage in ethical
and social well-being
through
manufacturing value
enabling products
 Adopt innovative
processes to deploy
new products
 Lower taxes
 Increase revenues
 Maximize gross
profits
 Lowers Taxes
 Build business
strategies to
engage social well
being
 Improve brand
image and
reputation
2
Labour
councils
(unions) and
Labour
population
To create
better
employee -
employer
relationshi
ps and
effective
labour
pools
To be effective medium
in labour – owner
relations
To channel labour pools
from local communities
to Big box retailers and
industries
 To improve
employment rates of
local communities
 To promote better
labour sourcing
practices by
providing the labour
pools
 To liaise with local
and central
governments in
promoting policy
adherence and
governance
 Reputation to drive
effective social
encouragement
and engagement
 Advocates of better
employment
measures and
policies
3
Financial
Markets /
Institutions
To engage
profitable
exchange
of trade in
the
economy
To support industries in
debt financing and
equity financing
To be the levers of
financial stimulus to
growing markets
To drive economic,
financial and
employment growth
 To lend debt and
equity to growth
oriented industries
 To provide attractive
debt financing for
organization
adopting
government policies
 Interest revenues
for Banks and
strong equity
markets
4
Local
communities
To enable
and create
socially,
financially
healthy
societies
To be socially
responsible for basic
education and societal
well being
Encourage better
corporate – social
engagement
 Promote increase in
prosperity inside the
community.
 Increase the Income
of the population
generating better
quality of life for the
same population.
 Better educated
communities
 Basic skilled
workforce
5
Feedback, Evaluation and Assessment

12. pg. 11
Evaluation of results takes many forms. One aspect of this involves seeking regular feedback from local
communities to ensure that activities are on the right track and necessary implementation improvements
can be made (this also builds trust among relevant stakeholders). From the outset, companies and their
partners need to define the mechanisms through which to measure the impact of planned initiatives
(and recognize that measuring comes with a cost that should be factored in at an early stage). As
projects are implemented, companies should ensure that measurement is actually being conducted. To
effectively convey the impact of initiatives—both internally and externally—it is important to agree on a
communications framework from the outset. Sufficient time should be allowed for an impact to
materialize before announcing any results (communications may backfire if results are not being
achieved as quickly as anticipated). If expectations are managed effectively, communications provide
a critical tool in securing buy-in from local communities and partners externally and leadership support
internally—which in turn helps guarantee a long-term impact. Of course, the recommendations set out
here are not mutually exclusive. When embarking on social investment programmes, companies may
place more emphasis on some strategies than others, depending on the focus and scope of the
programmes they are planning to execute. Nevertheless, to varying degrees, all of them should be at
least considered if companies are to turn their social investment programmes from charitable to
strategic.
System Thinking and the Feedback Loop (As Is)
System Thinking and the Feedback Loop (To
Be)
A proper framework for evaluating a firm’s decision
to raise wages in the context of anti-sweatshop
activism would take into account both the costs and benefits of setting wages above the market-clearing
level. In a competitive market with no external pressures, a worker’s wages are set equal to the value
of their marginal product.

13. pg. 12
Conclusion: Together in a universal compact
The future is not what it used to be. Past expectations of ever-growing abundance
cannot be met. Infinite growth is not possible on a finite planet. We use more of the
Earth’s resources than Earth can regenerate, and natural systems can´t cope with the
waste from an economy built on ever-rising throughput of materials. At the same time,
the reality that governments, communities and businesses need to navigate is
increasingly complex — and the tolerance for navigational errors is zero. Furthermore,
the cost of inaction is rising by the day.11
In today’s intense globalization, more countries need to establish legal minimum and fair wage rates.
Human Resource professionals must familiarize themselves with minimum wage rates from data from
public and private sources. They should be able to recognize the limitations of the standard around
 A country's total compensation standards.
 A country's wage inflation.
 Wage levels that would comply with ethical sourcing guidelines.
Systematic Tax Exemption Program for businesses adopting minimum wage regulations prevents
businesses from increasing product cost and will maintain stable customer demand which prevents
minimum wage labourers from losing their jobs due to lack of production
Systematic Debt Rate discount Policy which allows special debt financing rates over meeting a %
labour population with min wage adherence.
Government will revise the minimum wage policies periodically and will amortize the tax exemption
over that period. This framework will also prevent excessive inflation.
Increasing the minimum wage too high, too fast can have a negative outcome by creating a ripple effect
throughout the economy. Thus a progressive approach towards minimum wages through government
sponsored special financial vehicles would only make this vision a reality. Governments, financial
institutions, businesses and communities together are equal partners in creating a sustainable and
scalable model to meet the minimum wage standard and create shared value.
11
The Global Opportunity Report 2015 by UN Global Compact.