Living wage: A new standard in the fresh fruit and vegetable trade?
An important part of social responsibility in the European fresh trade is fair wages for workers; a living wage to meet their basic needs. More and more companies in Europe are taking this into consideration when finding new suppliers. A living wage can improve the economic position of supplying farms and their workers a lot. But, there is still a long way to go before the market accepts higher prices due to living wages.
With a living wage, workers and their families should be able to live a decent life. A decent standard of living includes having:
- clothing; and
- meeting other essential needs.
The Global Living Wage Coalition measures living wages around the world. For independent suppliers without a salary, such as smallholders or tradesmen, a living wage is often called living income.
Price competition still plays a big role
In Europe, importers, retailers and other stakeholders agree that workers and farmers need an acceptable living wage. Still, not everyone in the sector has welcomed the actions needed for a fair living wage. Economic interest and price competition still play a big role. It is not clear how long it will take before living wage becomes the new standard. But, as a supplier, you will have an advantage if you prepare for the future.
There are many fruit importers in Europe. Eosta is one of them and is working towards a living wage with its suppliers. The company did a case study of the Kenyan organic avocado supply chain. This resulted in the report: ‘Living wages in practice’. In Burkina Faso, Eosta found out that an extra €0.10 per kilo for mangoes would close the pay gap and make a living wage possible for almost 200 workers. Still, the higher wages were not accepted straight away by the market because the economic system is still focused on cost-saving.
Living wage needs to become standard practice. That way, it will become widely accepted in the fresh trade sector. The sector also needs to make sure that products that guarantee a living wage do not face unequal competition in product pricing. One of the living wage successes is the banana sector in the Netherlands. This sector created the first nation-wide initiative. Dutch supermarkets are now committed to a living wage for banana workers in the international production chain. Together, they aim to reduce the wage gap by at least 75% in 5 years for their entire banana range.
Commitment from supermarkets is very important. Supermarkets are the biggest channel for fresh fruit and vegetables in Europe. Countries such as Germany, Austria, Switzerland and those in Scandinavia may be more likely to accept higher prices if this means producers get a living wage.
In Germany, supermarket Rewe has its own ’Guideline on Living Wages and Incomes’. Consumers are becoming more aware of the living wages issue. Organisations such as IDH The Sustainable Trade Initiative, Fairtrade International and the Ethical Trade Initiative (ETI) are also creating awareness for living wages. This will lead to more initiatives. ETI is a common standard for several UK retailers, and it sees increasing wages as urgent.
Improving the standard of life
A living wage can greatly improve the standard of life for people in producing countries. As a supplier, you should look into living wages. The main challenge is how you include a living wage in existing business models. Discuss living wages with your buyer and ask for their opinion. Before you do, use the IDH tool: Salary Matrix for a Living Wage V.2. With this tool, you can calculate the total pay and difference with the recommended living wages.
For other requirements and standards, read the CBI study ‘What requirements should your product meet?’
ICI Business wrote this news article for CBI.
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