Journey Towards a Living Wage

14 April 2014

A post by Wilbert Flinterman, the Senior Advisor on Workers’ Rights and Trade Union Relations of Fairtrade International. Read more about Fairtrade's perspective on workers' rights here.

The topic of living wage has exploded into public consciousness – from striking fast food workers in the USA, to global clothing companies in Bangladesh, to speeches by the Archbishop of York.

A living wage allows a worker to cover the essential needs of their family, with a little extra for “just in case”. The legal minimum wage too often falls far short of this, leaving workers around the world mired in poverty. So what is needed to finally transform workers’ wages?

The living wage challenge

Living wage has been part of the Fairtrade Standards for years. Our Standard for Hired Labour states that plantations must start off paying the legal minimum wage then progress towards a living wage.

First obstacle: there is no agreed living wage for agricultural workers. Without knowing what a living wage is, how can we get there?

Then there is the question of how to move companies towards paying a living wage. We need to make sure plantations can raise wages and stay in business, otherwise there is a risk of workers losing their jobs and ending up in a far worse situation.

Some Fairtrade plantations form a bloc with other companies to negotiate with local unions on a standard wage level for all workers in the sector. In these cases it’s not enough to only address wages on Fairtrade farms.

Without a solution to these questions – and even though workers have long benefited from Fairtrade Premiums for education, health care, career development and community projects –they have not seen enough progress on wages. Following our 2012 workers’ rights strategy, we have initiated a significant project to move towards living wage and we are bringing others along too.

So how much is a living wage?

Our first task was to figure out how much a living wage actually is – how much money does a farm worker need to cover family living costs?

Fairtrade International commissioned experts Richard and Martha Anker to adapt their existing living wage methodology to the needs of agricultural workers. The new methodology estimates a farm worker’s expenses based on three “baskets” of costs: nutritious food, decent housing, and other essential needs. It collects actual costs of workers and their families.

We ran four pilots to set national rural living wages using this new method. The Ankers worked with local teams to collect costs for South African wine grape farms, Dominican Republic banana plantations, Malawian tea plantations, and Kenyan flower plantations. We were delighted to have support from Social Accountability International (SAI) Sustainable Agriculture Network/Rainforest Alliance (SAN/RA) and UTZ Certified in our endeavour.

Now we are beginning the large task to set rural living wage levels in all regions around the world where we have Fairtrade certified plantations and hired labour set-ups.

And once living wage benchmarks are agreed and in place, the even bigger work will begin: tackling ‘how’ farms can transition to actually paying a living wage…

And what needs to happen for companies to pay it?

For real change on wages we need to start with the position of workers. Our vision is that workers themselves can negotiate and influence their pay and working conditions.

Our recently revised Fairtrade Standard for Hired Labour requires employers to negotiate with workers’ representatives on wages if these are below the living wage benchmarks. There must be annual increases on workers’ real wages towards living wage.

Workers need strong organizations to represent them in these negotiations. Our new Hired Labour Standard greatly strengthens workers’ Freedom of Association in practice. Fairtrade International is also directly supporting trade unions in a number of regions with Fairtrade certified plantations.

We also changed the rules for the Fairtrade Premium, so workers can spend up to 20% of the Premium for cash or in-kind benefits, or up to 50% if the majority are migrant workers. (We consulted over 400 workers and got strong feedback to keep the Fairtrade Premium focused on collective projects.)

At the same time, we are working to build a critical mass for change. Although sales are growing around the world, Fairtrade makes up a small percentage of global trade. Our ability to transform workers’ wages is limited if we act alone.

We have joined with other standard-setting organizations to form a living wage working group, including SAI, GoodWeave, SAN/RA, UTZ Certified and Forest Stewardship Council. Together we are a strong voice from the voluntary standards movement promoting a single living wage definition and methodology.

We are also reaching out to companies individually and through multi-stakeholder platforms like the World Banana Forum and the Ethical Tea Partnership. With Oxfam, the Ethical Tea Partnership and local industry we are working to define and agree a living wage strategy for tea workers in Malawi.

We have begun to sit down with companies from across the supply chain, using the new living wage benchmarks to figure out how much each one must pay to share the costs of raising wages. Our message to brands, traders and retailers is that there is no way that their suppliers can successfully deal with this issue alone. Everybody has to pitch in.

Ultimately, paying workers a living wage must be a journey for us all. It needs everyone in the supply chain – the local plantations, exporters and importers, brands, retailers and everyday shoppers – to be willing to pay a little more so workers at the far end of the supply chain can receive a living wage.

Read opinion article 'Living wage: setting benchmarks for farm workers' by Wilbert Flinterman on The Guardian

See first living wage benchmarks published June 2014

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