The extent to which local producers/manufacturers can pay living wages is directly related to the productivity and profitability of their business. Under the Malawi Tea 2020 program IDH continued to support the revitalization of the tea sector and discussed with buyers and producers the application of price-discovery models to help the Malawian tea industry move towards living wages. Tea buying companies like Unilever, Tata Global Beverages, Taylors of Harrogate and many more, are testing the model putting living wage in the core of their procurement discussions.
In bananas we see a clear business case for living wages. Once plantations start increasing wages a self-propelling mechanism evolves: workers satisfactory and production & quality go up and staff turnover goes down, reducing recruitment costs and creating higher margins that allow for paying higher wages. This probably works in countries with a functional labor market. IDH finalized studies on living wages in fruits & vegetables in Ghana and Ecuador, in flowers in Ethiopia and Kenya. The Floriculture Sustainability Initiative (FSI) started a working group on living wages to drive living wage in the sector. In the apparel sector IDH introduced Worker-Management Dialogues as a tool to improve working conditions and wages. In the Race to the Top Program (RTTT) in 11 factories in Vietnam. First outcomes show increased worker satisfaction, translating in lower absentee rates lower turn-over and increased productivity. IDH designed and initiated with seven brands and retailers the Life and Building Safety (LABS) initiative to pilot scalable solutions to eliminate preventable fire, electrical and buildings safety risks in key apparel and footwear producing countries, and avoid future disasters like Rana Plaza.
As part of the program the brands and retailers have agreed to apply a harmonized, pre-competitive LABS Standard in the assessment of their Apparel & footwear suppliers. LABS is working on policy, public inspection/ enforcement, and education through state centric collaboration platforms to create and consolidate systemic change.
IDH Living Wages and Improved Working Conditions projects affected in 2017 a total of over 70,000 workers on plantations, greenhouses and factories.
Volumes of sustainably produced tropical fruit and vegetables, like bananas, pineapples, green beans and avocados, has risen significantly from 50 to 70% in one year. This is what has emerged from the 2017 annual monitoring of the IDH led Sustainability Initiative Fruit and Vegetables (SIFAV).
SIFAV, launched and developed by IDH, has grown from 13 Dutch partners initiative in 2012 to a pan-European initiative with over 40 partners, including leading retailers, brands, traders and civil society organizations. The SIFAV Basket of Standards includes both standards that have consumer facing logos and those that don’t, and requires that social standards are benchmarked against the Global Social Compliance Program (GSCP), of the Consumer Goods Forum.
The challenges market requirements, particularly with regards to social aspects. In 2012, the verification of working conditions at farm level in fruit and vegetable value chains was far from the norm. Requiring close relationships with producers, has led to a greater awareness of social conditions at production level and has enabled the development of plans to improve working conditions and living wages. At 70%, sustainable procurement under SIFAV accounts for more than 2 million tons of produce. Having impact on working conditions as well as inclusion of smallholder farmers and reducing the environmental impact through better agrochemical, water and soil management.