Fairtrade’s living wage solution for the banana sector

Peru Banana producers 2021 APBOSMAM FARMERS Docuseries

Fairtrade is driving change in the banana sector with a practical approach to low wages through its innovative Fairtrade’s Living Wage solution.

Fairtrade’s estimates country specific Living Wage Reference Prices using a unique methodology.

The Fairtrade Banana Bonus is our commitment to achieving the Living Wage Benchmark in banana producing countries.

It is paid from the Fairtrade Living Wage Differential – this is the difference between the Fairtrade Minimum Price and the Premium cash payout paid to producers and the Living Wage Reference Price.

What is the Living Wage Reference Price

The Living Wage Reference Price is a voluntary payment that commercial partners can make to close the living wage gap in their supply chain.

For bananas, it is the price of a packed box of 18.14 kg fresh banana set for a specific banana producing country.

If paid for each sold box, this would ensure that all workers on a banana plantation earn at least a gross living wage, as defined in the benchmark reports published by the Anker Research Institute.

Supporting businesses to close the living wage gap

Low wages persist in the banana sector, and workers struggle to make a decent living. This situation can contribute to human rights violations and increased health and safety risks.

Fairtrade Living Wage solutions support businesses Corporate Sustainability Due Diligence Directive reporting through their sourcing commitments.

Do you know our Banana Dashboard?

Visit the Fairtrade Banana Dashboard, a unique tool to learn more about Fairtrade bananas and the path to a fairer banana sector. You’ll learn about Fairtrade producers and origins, services and programmes, insights into human rights and environmental topics, and ways to deepen impact in living wages, climate adaptation, and more.

How does it work?

Traders and retailers that source from Fairtrade certified plantations already contribute to improving wages by paying the Fairtrade Minimum Price and Premium. However, recent studies and salary matrix outcomes confirm that in many countries there still is a gap between current wages and living wage benchmarks.
Fairtrade has developed a practical, credible solution for voluntary living wage payments, the Fairtrade Banana Bonus. A significant part of the wage gap already gets closed via the 30 percent cash from the Fairtrade Premium. Where companies choose to pay the Living Wage Reference Price, the remaining gap is closed through this bonus Living Wage Reference Prices.
Fairtrade offers a five-step process for closing the remaining wage gap in a model with shared responsibility and responsible purchasing practices for the entire supply chain.
The approach includes a transparent and verified transfer of the voluntary payment from the retailer via the trader to the Fairtrade Premium Committee of the banana plantation. The Premium Committee allocates the funds, the ‘Fairtrade Banana Bonus’, as an additional bonus to eligible workers. FLOCERT verifies the payments as a paid service and on this basis, retailers may make appropriate claims.

Spotlight on the guidelines

In addition to the Fairtrade Banana Bonus, Living Wage Guidelines have been developed to guide businesses on how the Fairtrade Living Wage Differential is paid along the supply chain until it reaches the Fairtrade Premium Committee and how the Fairtrade Banana Bonus is distributed to workers earning below a living wage

In the long term

In the long term, a price captures the true cost of living wages over time. The Fairtrade Banana Bonus, which acts as a temporary payment, will decrease, as wage structures take over.

Fairtrade will support workers in building capacities to strengthen social dialogue, improve work conditions and increase salaries through collective bargaining.
As benchmarks are refreshed, the pathways re- starts if gaps increase. We would measure this through accurate wage data, with our local team’s expertise.

This initiative ensures that workers earn a fair, living wage, creating more sustainable livelihoods and resilient banana supply chains.