In a true collaborative effort with stakeholders from across the entire tea value chain, IDH and its partners are helping to foster a more competitive and profitable Malawi tea industry where workers earn a living wage and smallholders a living income, and where women and men have the ability to work in healthy and fair working conditions.
Malawi is Africa’s second largest tea producer, after Kenya. Malawi is also one of the world’s poorest countries—62% of Malawians live below the World Bank’s extreme poverty line, and approximately 50% of the children lack access to adequate nutrition.
Across the globe, low wages paid to workers on tea estates incite tensions in terms of social and economic responsibilities in both tea production and procurement. Tea-buying companies have attempted to address social and environmental issues in their supply chain by requesting certification from their suppliers. Yet even with certification in place, tea pickers in several tea-growing regions cannot make a decent living at their current wage levels. Implementing living wages for tea workers in Malawi would imply a rise in cost of production — and likely a reduction of Malawian tea growers’ competitive advantage on the international market, where the country’s low production costs have secured buyers through attractive prices. Structural changes are therefore needed to enable workers to improve their livelihoods and lift themselves out of poverty.
Our work began with research and establishing a Living Wage Benchmark as a target-setting and negotiation tool for workers, employers, and partners. This benchmark and the research behind it is thoroughly explained in the report by Richard and Martha Anker (2014) entitled, ‘Living wages for rural Malawi’. The preliminary result of the living wage benchmark was 2,889 MWK (USD PPP 15.04) for the benchmark and 1,574 MWK (USD PPP 8.16) for current incomes.
Overall, the Malawi Tea 2020 program is an ambitious and unique program because it is supported by stakeholders all along the tea value chain. All participating producers are members of the Tea Association of Malawi (TAML). The main buyers of Malawi tea, including traders, packers, and retailers, are involved, and the main development organizations, certification schemes, civil society actors, and trade unions in the sector are engaged in the program. The Malawi government also endorses the program.
IDH, together with the Ethical Tea Partnership (ETP) and Oxfam, initiated this program and have been leading it ever since. It began by commissioning multi-stakeholder research into wages in the tea industry as mentioned above. The findings of this study caused great concern but were accepted by all stakeholders, providing the platform for a collective commitment to tackle low wages in Malawi.
In the Malawi Tea 2020 program, IDH acts as a neutral convener, coordinating input from various stakeholders. We also act as an independent chair and secretariat to the Steering Committee, and play a coordinating role in the Wages Committee. In addition, we now have a seat in the Evaluation Committee, after initially being the coordinator of it. IDH is also currently leading discussions on the Sustainable Procurement Model, which enables buyers to see whether the price they pay for their tea would cover a contribution towards the cost of a living wage.
The overarching goal of the Malawi 2020 partnership is to achieve a competitive, profitable tea industry that can provide its workers with living wages and ensure that smallholders thrive.
The program Roadmap established five pillars to achieve key objectives by 2020:
- A profitable estate sector
- A motivated workforce with better opportunities for women empowerment
- A living wage for workers
- A profitable smallholder sector
- An energy-efficient and environmentally sustainable industry
Since its inception, the program has focused on creating a platform to revitalize the Malawian tea industry and enable it to deliver better quality tea that attracts a higher price which can sustain higher wages in the direction of living wages, The program carefully monitors the competitiveness of the industry, making sure the program does not cause unintended side effects such as rapid mechanization and/or job losses.
IDH and partners aim to improve the living wage and nutrition of workers, as well as by improving the worker housing to a level where they can also receive more nutritious meals. Together, we convene workers and tea employer organizations to strengthen workers’ collective bargaining skills in wage setting and to implement activities that enable tea producers and smallholder farmers, to increase their profitability.
To implement this strategy, projects are carried out such as: convening and facilitating stakeholders along the entire tea value chain in Annual Progress Meetings, Steering Committee meetings, Evaluation Committee meetings and Wages Committee meetings. We also facilitate access to affordable finance for replanting, irrigation and factory refurbishment. We furthermore support the start and annual recurrence of the Collective Bargaining Agreement, strengthening the capacities of both employers (tea estates) and tea workers. We also support Oxfam activities of holding buying companies accountable and coordinating the creation and implementation of improved buyer procurement practices.
We measure change by assessing the prevailing wages every year in relation to the Living Wage Benchmark as per the Anker methodology earlier referenced. We assess the level of livelihood improvement for workers and the supply chain contributions depending on the procurement mechanism. We further measure the competitiveness of the Malawi tea industry.
The Malawi Tea 2020 program actively involves stakeholders from every part of the tea value chain. A Steering Committee coordinates activities and comprises representatives from IDH as well as the Tea Association of Malawi (TAML). TAML represents tea producers in Malawi, Oxfam, GIZ, the president of The Plantation and Allied Workers Union (PAWU), the Ethical Tea Partnership, and the tea buying companies. A Wages Committee is responsible for independently assessing the living wage benchmark and the members are Martha and Richard Anker, and Levison Chiwaula.
In total, the following organizations are committed to the program:
Every year the Malawi Tea 2020 coalition reports jointly on steps taken towards the 2020 targets as defined in the Roadmap. It is clear that the collective work is transforming tea trading and the tea industry as a whole in Malawi. Achievements from 2017-2018 with specific regard to achieving a living wage for tea workers include:
Living Wage increase
- The Malawi tea 2020 wages committee has worked to define what constitutes a living wage in the Malawian tea industry.
- Since the collective bargaining negotiations, the wages for a tea worker increased with 11% and are now 1380 Malawian kwacha.
- In addition to wage increments awarded by the tea estates, it is now expected that buyers will soon contribute to our Living Wage journey through discretionary payments, guided by the recently finalized ‘Sustainable Procurement Model’.
- The gap between current wages and living wages have narrowed in large part due to increased Plantation and Agriculture Workers Union and the Tea Association of Malawi capacity to improve the wage-setting process and worker representation. At the moment, the current prevailing wage, including cash and in-kind benefits, is $3.10.
Collective Bargaining Agreement (CBA) – Wage negotiations
- In 2018 the Plantation and Agriculture Workers Union (PAWU) and the Tea Association of Malawi (TAML) negotiated and signed the second CBA. An intense capacity building program for both PAWU and TAML leadership preceded this process, ensuring the development of mature systems for industrial relations that help improve wage setting and worker representation.
- While a gap remains, 397 managers were trained on the Collective Bargaining Agreement (CBA), which lays the groundwork for an employer/worker dialogue on wage-setting processes. A total 5,500 workers participated in wage training sessions.
- The CBA led to an across-the-board wage increase of 11.29% for all members of the bargaining unit for 2018/19, plus a further 5% increase for 2019/20. After signing the agreement, PAWU received support to conduct CBA sensitization sessions, which have reached 2,237 (1,018 female and 1,219 male) workers so far and will continue until it reaches all workers.
Read here to find out more about our progress for the full Malawi Tea 2020 program.
Malawi Tea 2020 set out with ambitious goals. Commitment from stakeholders has made it possible to keep the momentum. During the 2017 Annual Progress Meeting (APM) it was recognized that the Roadmap target of achieving a living wage by 2020 was not viable, and that buyer contributions to this goal needed guidance. The sustainable procurement model, one of the main focus areas for 2018, provides a framework that can inform buyer contribution though procurement. In addition, stakeholders have been in consultation to review the 2020 target and it’s the intention of IDH to agree new target dates at the 2018 APM.