Increase wages, bonuses and in-kind benefits

Spearheaded by the local union, and supported by CNV Internationaal, Nicaragua’s sugar cane industry has achieved significant success in cultivating equitable wage practices and improving conditions for its 35,000 workers. Through collaborative partnerships, local union organizations leveraged data and buyer support for living wages in their negotiations to successfully increase salaries. This case study stands as a testament to the power of collective efforts and data-driven initiatives in creating positive change across supply chains.

Recognizing the importance of data

While local unions can achieve great success through their own leadership and  expert local knowledge, they may not have the data at hand needed to identify gaps in progress. With support from CNV Internationaal , existing local unions in Nicaragua understood that data would allow them to be better prepared for wage conversations. Through this process, they also pivoted to understanding that the most vulnerable workers are not protected by unions.

Collecting the data needed for successful negotiations

As part of this initiative, data gathering including monitoring – in the form of surveying all permanent and temporal workers in the sugarcane industry through the Fair Work Monitor developed by CNV Internationaal. The survey asked participants for wage levels, and whether these met the legal minimum wage or benchmark living wage.  This was complemented by an economic analysis, which shed light on information about the wider environment, including the profitability data of companies.

 Together, this provided the local unions with a powerful position in its collective bargaining. By being better informed, negotiations were more effective, and salaries were successfully increased by between 8% and 12% over the last three years. Learn more about this case here.

Finding the Right Farm to Pilot

The success of the living wage pilot depended on working with a trusted producer farm and one whose owner was committed to the project. Taking into consideration the limited time-frame of the project and limited capacities for small-scale growers, Greenyard found the ideal farm to begin their pilot project.

Practical Implementation of the Salary Matrix

To start the project in 2021, Greenyard measured the living wage gaps using the Salary Matrix. Significant wage gaps were identified: 28 of 52 workers were found to be earning below the Living Wage with an average gap of 34% (156 USD). Further training from IDH found several other issues at hand. It was discovered that the producer’s knowledge of the tool was limited and that training could improve data accuracy. Additional training improved the understanding of the tool, and by the end of the pilot, the Salary Matrix indicated that no workers were earning below the living wage threshold.  

Impact on Salary Structure: Producer’s Choice

After measuring the living wage gaps using the Salary Matrix, Greenyard entered the data into the GIZ costing tool to identify a potential new salary structure to pilot and calculate the related costs. Together with the producer, Greenyard reviewed the different scenarios and agreed to to pay all workers an equal bonus, including those earning above living wages. This strategy was chosen, in part because many workers have salaries right below or right above the living wage. By only increasing wages for the ones below, it would distort the existing wage structure. By giving all workers an equivalent bonus, this helps to ensure all employees are supportive of the initiative towards living wage.

Sharing the Burden

After using the Salary Matrix and the GIZ costing tool to determine the cost of the living wage gap to be .74 USD per box of bananas, the value was communicated to European buyers. The reliable calculations enabled buyers  to contribute to the amount needed to close the living wage gap, with an understanding of the implications of extra payments. This, in addition to the in-kind support of managing the project by the producer enabled this significant value to reach the production side of the supply chain.

Gift Cards–Going the Extra Mile

Greenyard engaged the local working committee to ensure the additional value reached the workers. How exactly the capital would be distributed was up to the employees who collectively decided to make the ‘gift cards available’ to all workers, regardless of seniority. Open discussions narrowed the options down to either receiving cash or gift cards to a large grocery store in the local area which provides typical goods such as food, diapers and other household needs. Although workers and management agreed that gift cards are a short-term solution, and benefits largely remain with the local supermarket chain, this proved to be the most practical option. Read more here. 

Full article coming soon.

Uniforms from apparel maker, Schijvens, are found on employees at well-known companies, including McDonalds, Albert Heijn and the drugstore-chain Kruidvat. Schijvens began their living wage journey by making changes at their own factory in Turkey before expanding the effort to include suppliers in other countries, such as Pakistan and China. Schijvens uses transparency to bring its customers on board. They share open cost calculations – showing them exactly how the price they pay relates to wages paid in the factories – with customers to communicate the impact of living wage payments on worker livelihoods. For instance, Schijvens’ found that raising the price of polo shirts by 25 cents per item was sufficient to achieve a living wage.  Most customer companies support the mission, and when prices cannot be raised, Schijvens pays the difference from its own margin. For more information you can visit the full case study here.

The electronics industry is well-known for its challenging working conditions. Just-in-time manufacturing, highly competitive markets, and pressures to deliver the latest model put pressure on workers, who endure unsafe working conditions, low wages, and limited ability to influence their work environment. Fairphone works closely with its direct suppliers to enable them to make progress on living wages, this includes evaluations to determine the gap between what workers earn and a living wage. Learn more about Fairphone’s practices in the full case study. 

Retailer Coop and Fairtrade Max Havelaar, both based in Switzerland, collaborate to support workers on two banana plantations in the Dominican Republic. Accurate measurement of the wage gap was critical to understanding the extra amount needed per box of bananas to achieve a living wage. Then, distributing the value to workers was made possible through a fund. To ensure their contribution was longer lasting and had producer support, since 2021 Coop committed to minimum purchase volumes. Now that Coop’s bonus contribution and volume commitments have been established for a few years, Coop and the banana plantations continue to discuss the future on how to ensure a long term stability. For more information, see the full case study here.

Nudie Jeans is committed to make living wages possible for employees at all their main suppliers in high-risk countries by 2025.Nudie Jeans is a small but important buyer with most of their suppliers. Nevertheless, the brand is now paying their share of the living wage to one third of their suppliers’ workforces. Nudie Jeans applies a unique strategy that puts the supplier in the lead and empowers them to define their approach to living wage, manage the living wage payments transparently and build their capacity for social dialogue. Moreover, they encourage their suppliers to engage with additional buyers besides Nudie Jeans to join in and do their part. For more information you can visit the full case study here.

In 2020, Eosta became the first supplier to bring Living Wage products to store shelves in Europe with their Living Wage Mangoes. Since then, they have sold seven full containers of organic Living Wage mangoes from the supplier Fruiteq in Burkina Faso. The additional income has helped mango harvesters and packing house employees launch their own small businesses. For more information see the full case study of Eosta.

In a joint gap assessment, Dutch retailers found an average wage gap of 9% in the banana supply chain. Together the retailers will reduce this gap by at least 75% within in the next 5 years. That requires a change in procurement practices and a clear commitment to working with suppliers. Read more about the full case study.

In a true collaborative effort with stakeholders from across the entire tea supply chain, the 36 partners signed an MOU commitment, developed a roadmap for Malawi Tea 2020, and agreed on a five-year timeline to close the living wage gap. Read the full case study and much more about the program.