Yes really agree.
Tackling such a deep-rooted systemic issue such as low wages in global supply chains requires a series of interventions that are contextually determined and supported by collective action across the sector. For businesses often mapping and understanding living wage gaps in their own supply chains is the key first step. The conversation then needs to turn to what needs to be done both individually and collectively to close these gaps.
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Exactly, Francesca! But you have to be pro-active rather than a passive player
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Once a benchmark has been established, it is not reasonable to expect that the gap to the living wage can be done overnight. It is a process where buyers and suppliers need to come together and define timelines and procedures for overcoming the gap. The ILOâs recommendation on Social Dialogue -bringing together workersâ and employersâ organizations along with support from the state apparatus- also needs to considered in outlining implementation procedures.
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Certification schemes, like Fairtrade, can play a key role in supporting businesses to meet living wage commitments. Fairtrade sourcing is a critical âfirst stepâ bundle of interventions to close the Living Wage gap. Through Fairtrade sourcing, producers receive the Fairtrade Premium and Fairtrade Minimum Price protections so that for example banana plantations can maintain the costs of production (including wages) during commodity price crashes. Fairtrade Foundationâs recent report, Exploring the benefits of the Fairtrade Premium in the context of living wages, explores this: it explains how investments made through certification support the closing of the living wage gap, and help create the enabling environment needed to make living wages useable and effective in improving livelihoods.
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Where good examples are concerned, many companies like Philip Morris International, Nike (NKE), Patagonia, Primark, Puma and H&M, among others, have made commitments to paying the workers/farmers in their supply chains living wages and living incomes. There are also multi-stakeholder initiatives, such as the Fair Labor Association, that are advising ways in which living wages can be implemented.
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For Mars, our value chain extends from our workplaces around the world that employ our Associates to thousands of smallholder farmers producing the raw materials on which our brands and products depend. From mapping our supply chains and understanding how many people were connected to producing the raw materials we purchase and where they are located overlaid with data on poverty levels, we learnt that many smallholder farmersâ incomes are unfortunately not reaching a Living Income today. Because of this work, when we launched our Sustainable in a Generation plan, we ensured increasing income was a key focus of our strategy and ambition. Our ambition is: We believe that everyone in our supply chain should earn sufficient income for a decent standard of living. We have worked towards this over the past decade not only through designing programs with farmers in our supply chains to try income improvements, but we also co-founded the Farmer Income Lab, a collaborative think & do initiative to discover what truly works to improve farmer income levels.
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Agree! Fairtrade believes that a living wage should ultimately be rooted in collective bargaining agreements.
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For me itâs not just across the sector, but also the full length of the value chain. Much of my work is done in the smallholder farmer sector where it is the Living Incomes concept that has more meaning as the farmers and their farm workers (typically other family members) are not employee wage-earners.
Here it is highly unlikely that any single cash crop can hope to lift the farmer above the Living Income level as they are also dependent on other cash crops and other non-farm income. This means that the situation is quite complex⌠to say the least!
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Definitely agree action is needed, which should be informed by the mapping and measurement against benchmarks. In fact, we have a great example of this from the mint supply chain we source from in India.
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Farmersâ incomes are two-tiered. At the ARI we estimate what it would cost for a faming family to live a decent life but purely from a consumption viewpoint. The other side of the picture is the costs of production and these actually vary over types of farmers, i.e., small, medium and large.
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In 2015, our strategic implementing partner Tanager conducted a baseline study to fully understand the entire mint supply chain in India. The results were clear â mint farmers in Uttar Pradesh were not thriving. Since kicking off the program, weâve trained more than 24,000 farmers on Good Agricultural Practices. Yields have increased by roughly 60%, and input costs have been reduced by more than 20%. This has led to an increase in mint crop income of over 250%. And through our training we have reduced the demand for water by 50%. Weâve also established four Farmer Producer Companies (FPCs), one of which has already done $1.3 million in transactions of mint oil and input supplies.
In four years, we have engaged over 8,000 women through women farmer groups (WFGs) and self-help groups (SHGs). 4,800 have been trained in their rights and entitlements, financial literacy, nutrition, health and sanitation. More than 10,000 loans have been distributed through SHGs. Through our Kitchen Garden intervention, 750 women are now growing nutrient-rich vegetables to support their homes through better nutrition and income diversification. And our Total Literacy intervention, 500 women have learnt basic reading, writing and arithmetic skills.
Shubh Mint: Advancing Farmer Livelihoods During COVID-19 | Mars, Incorporated
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Really key point Francesca to reflect on small holder farmers in the context of living wages especially in the banana sector where is is key to ensure that any action to fulfil commitment on living wages for banana workers must not disadvantage small-scale banana farmers, whose livelihoods also depend on international supply chains. If businesses are incentivised to announce that they have closed living wage gaps in their supply chain, they may then switch sourcing away from smallholders and towards plantations with clean living wage datasets, and to countries without a large wage gap. This is why Fairtrade has a strong focus on supporting living incomes for small-scale banana farmers as well as living wages
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Welcome Hamish - great to have you here.
Good examples Azfar - and you also mentioned flowers earlier in the conversation. Weâve seen that there have been tangible results on increasing wages for workers in a number of sectors where Fairtrade works. Between 2017 and 2019 wages in floriculture in Ethiopia, Uganda and Tanzania rose between 35-127% on the back of the Fairtrade floor wage requirement in the Fairtrade Standard for Flowers and Plants. This model became an industry standard for floriculture in East Africa.
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We have found through some research on What Works by the Farmer Income Lab that the truly effective programs bundle interventions to address poverty at the smallholder farm level. It is complex, because of the diverse variables and levers that need to be considered to drive improvements on the target crop income as well as through other income sources to reach a decent standard overall for the household income.
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Fairtrade-Blooming-Back-Better.pdf There is a lot in this report on Flowers and Living wage but page 10 onwards talks about the floor wage that was introduced into the Fairtrade Flower standard and the impact it has had.
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Yes, it is key to consider the impact to people at origin with changes to sourcing strategies.
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I didnât finish my last point on the costs of production and how farmers can be helped in this regard. Something that Francesca may want to take up, particularly so if we take LI to include both consumption and production costsâŚ.which, at present, the estimates donât deal with
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Also really key to think through encouraging responsible purchasing practices in the context of living wages such as long term contracts and working to ensure meaningful volumes are being sourced at a higher price from a plantation or factory to enable a living wage to be paid. This is critical to avoid dilution of cash per worker.
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