What a glorious strawman.
Our society has a very hard time with the concept of "living wage," even by our own standards. If the auto giants aren't a satisfactory example, ask yourself how many immigrants in this country make ends meet: by living with extended families in what are ordinarily considered unsafe, overcrowded conditions, and working excessively long hours in low-paying jobs with few or no benefits.
Simple: Western nations simply kill demand for the goods by banning the importation of goods produced in that manner. The companies in question will still be able to produce goods there at a profit over US or Europe made goods, but will still have to provide for the basic needs of workers. Factories would need to be audited. Get permission for that by getting it from the local government. Dont give permission? No more trade.
Who is going to ensure that all Western nations act in tandem? That's the central problem of your theory, for if one firm cuts back and others do not, that firm will be undersold, and gradually forced out of the marketplace, even if it can offer a product with a superior human rights record attached. Some profit or "only slightly less" profit may still be a serious problem.
Who will train the auditors? How will you achieve oversight? What local government is going to give permission? Why should they be intimidated by a harebrained policy that will gain no political traction?