“Wages should be based on a worker’s contribution to wider society, rather than their ability to generate profit.”  This is the proposal made by Olivier De Schutter, the UN special rapporteur on extreme poverty and human rights, in a recent report.  It is not an entirely new idea, but it will probably resonate more in today’s socio-economic circumstances.

When he presented the report at the UN’s General Assembly on 20th October, De Schutter argued that it is absurd that the jobs that are most valuable to others, especially people in poverty, such as care, charity work, or health care, are among the lowest paid, while others are paid so handsomely for the social and environmental damage they create.

In the European Union, the working poor – those who had a job for at least 7 months but whose incomes are below 60 per cent of the national median equivalised disposable income – constitute 8.5% of the active working population aged 18-64 years, showing no progress over 13 years.  Some countries, say Italy and Spain, have an even worse record, with a rate between 11-12% -worse than in 2008.  Thank God, in Malta the rate is just 7.2%, and even lower among women, at 4.1%.

Looking after others should pay

“In today’s job market, looking after others and the planet doesn’t pay,” complained De Schutter.  “Governments should draw up lists of the most socially valuable professions and pay them accordingly, while also listing the professions where pay should be capped to mitigate their harmful side effects.”

The problem existed long before the Covid pandemic, but unusually high inflation, fuelled further by the war in Ukraine, has meant that these wages fall short of a living wage, especially in cases where they have not been adjusted to the rising cost-of-living.

Worse still, in sectors such as food production, transport, cleaning, and sanitation, workers are underpaid, and the minimum wage often does not provide a decent living.  This phenomenon is known as ‘in-work poverty’ — when people have a job but their income is not enough to keep them out of poverty.

The impact of low-work intensity can be quite extensive.  In Malta the percentage of risk of poverty among households with medium-to-low work intensity is 28.7%, followed closely at 26.9% among those with a medium work intensity.  Compare that with those at risk of poverty (ARP) who have a high or a very high work intensity – it’s only around 5%.

Further analysis of the figures reveals that the reason for the former high percentage is the ARP of households with dependent children (39%) versus that of households without dependent children (18%).  Is the medium-to-low intensity of the households with dependent children because the adult members of the household cannot work longer hours (even though child-care is free) or are there other reasons?  This needs to be investigated by the Ministry for Social Policy and Children’s Rights and the Ministry for Finance and Employment.  The reference to the latter ministry is because it might be that tax considerations are a factor.

In-work poverty

What is certain is that low wages are driving in-work poverty, with wage growth failing to keep up with the pace of median wages, even as corporate profits rise.  The impact has been felt more keenly by women, young people, and informal workers.  A look at monthly salaries for various types of occupations in Malta shows how service occupations command a salary which is 32% lower than the average and 56% lower than the highest-paid salaries.  The same gap exists with regard to elementary occupations.

Is this just a reflection of the differences in educational levels and skills sets between service workers and managers, or do other factors come into play?  No doubt both do, but my opinion is that in the most labour-intensive segments of the economy, keeping workers poor is still seen as the source of a comparative advantage.  Many businesses have thrived due to their ability to secure lower labour costs (Nepali food carriers or Filipino care workers).

Contrary to what happened in other countries, this is not because of the rise of new and non-standard forms of work (such as gig economy jobs) or of part-time work – in fact, while part-time work accounted for 16.4% of all jobs in 2013, its share last year was 9.7%.  Nor is it due to a rise in the percentage of self-employed persons, again a feature of labour market development elsewhere, since in Malta the share of self-employment has remained more or less the same over ten years, at around 5%.

In short, the situation is just that wages in certain occupations have not adjusted enough.  I have often written about the level of the minimum wage and that this should be raised considerably.  While I welcome the latest agreement between the social partners, I fear that the agreed adjustment will not be enough to protect the purchasing power of the workers who depend on it. While we’re at it, I hope that labour legislation will make sure that the adjustment reaches all workers, including undocumented migrants and those in non-standard forms of employment.  No worker should be threatened with arrest or deportation for filing a complaint against employer abuses.

Care workers

With regard to care workers, for a variety of systemic reasons such workers have never managed to carve out decent wages and working conditions, as the figures shown above amply illustrate.  So the concept of a “prevailing wage” standard in legislation just cements the industry-wide insufficient wages currently experienced in care work. But just because an issue is challenging does not mean that it is impossible to establish strong wage standards in this sector.  There is a strong administrative and political responsibility and opportunity to set equitable wages in this field.

The low remuneration of care workers can also be attributed to the fact that many of their tasks were traditionally performed by women within households without remuneration.  Even once the tasks were remunerated, the wages were set at a low level, reflecting a lack of recognition of the value to society of reproductive labour (as contrasted with “productive” labour).  

Similarly, the activities of domestic workers, for instance cleaning, washing, cooking, cleaning, and caregiving, are undervalued both because they are often considered “unproductive” and also because they can be done by women.  Now, these workers are disproportionately more likely to be foreign-born, which gives them even less power to negotiate for higher wages or better working conditions.

Our value systems and social relations acutely undervalue care work and discredit its importance to our lives.  Care workers are overwhelmingly women.  This necessitates a look at not only how we undervalue care itself, but also whocare workers are and the discrimination they face.

Securing living wages, dignity of work, and safe working conditions for care workers is necessary for our collective survival. Better pay and work standards unambiguously improve the lives of workers themselves and are good for society as a whole.

Photo credit: Kampus Production