Identifying the living wage gap at farm level

A new self-assessment tool developed in collaboration with Rainforest Alliance

Rainforest Alliance and IDH developed a self-assessment tool for identifying the living wage gap at farm level. The tool, which takes the form of a matrix, was created considering the specific needs of banana plantations, and developed with the vision of facilitating and stimulating dialogue within and beyond the banana sector on the payment of a living wage. This is a practical tool that allows plantations to effectively assess what they are paying their workers against the applicable living wage figures.

This Salary Matrix has been developed through the IDH SIFAV project ‘Next Steps in Sustainability: Measuring Impact and Assessing Living Wages’ that focuses on the banana production areas in Costa Rica and Belize, and aims at understanding opportunities, challenges and possible pathways towards the payment of living wages in the banana sector. Executed by Rainforest Alliance, the project sees the involvement of IPL (International Procurement and Logistics), the procurement division of the British retailer ASDA and several key private partner members.

As said by Ian Harrison, Director – Produce Technical at IPL: “Receiving specific information on the wage situation from the farms we source is a great step forward to enhance transparency and sustainability in our supply chain. We can then have an open dialogue with our partners. We would like to see this tool being used throughout the industry.”

The Living Wage Salary Matrix was created to assess the wages paid to banana workers at selected pilot farms from which the private partners involved in the project source from. These farms provided data on how their salaries, bonuses, and in-kind benefits are organized, and used the Matrix to evaluate how their total remuneration (including cash and in-kind benefits) compared to the relevant national living wage figures. The research behind the tool is based on the Anker Methodology for Estimating a Living Wage and on the work done by the living wage benchmark studies carried out by the Global Living Wage Coalition (GLWC) in Costa Rica and Belize.

Gaps calculated at farm level help to raise awareness, which can enable a more open and transparent discussion between farm owners and their buyers. Identified gaps become the starting point of a conversation to unveil barriers to the payment of living wages and to the long-term supply chain sustainability. These conversations are the first steps that need to be taken before plans can be formulated by producers and their buyers for reducing gaps over time.  Using a data-based approach, socio-economic root causes and sector dynamics can be better identified and more explicitly discussed not only by the private sector actors involved, but also by the governmental authorities of both producing and buying countries.

In the context of the ‘Next steps in Sustainability’ project, IDH is working to document the good practices identified at both farm and trade levels regarding wages, and to reflect on the reasons behind the wage gaps, as well as on the next steps that project partners and the entire banana sector would need to take to address the issue of living wage. This work will be published in the coming months.

Regarding the Salary Matrix, IDH will work with its partners to evolve the tool and its methodology further with the intention to make it applicable to more sectors and therefore available to supply chain actors interested in using it to measure gaps between current and living wages. Through close collaboration with stakeholders at both company and standard level, IDH aims to publish a further improved and refined version of the tool that, by adopting the same method of calculating gaps, can be applied across industries and therefore bring transparency at cross-sector level over this complex theme.

Rainforest Alliance and partners acknowledge the need for proper audit tools and will, during 2019, seek resources to develop a guide for auditors, which will include the evaluation protocol through documentation review and interviews with both the administration and the workers.

Click here to go to the tool

IDH & Living Wage

IDH facilitates the implementation of living wages in several sectors and countries. We are increasingly building intelligence on how each stakeholder can make informed decisions towards closing the living wage gap in supply chains. In addition, we are helping companies realize concrete steps to most effectively move towards this goal.