Q&A

What is the commitment?

The Banana Retail Commitment is the first nation-wide commitment from retailers to close living wage gaps in their banana supply chains.

The goal of supermarkets is, by 2025, to predominantly sell bananas that are sourced from producers that are proactively working towards paying living wages to their workers.

Together, they aim to reduce potential gaps between current remuneration and living wages for their entire banana assortment by at least 10% every year leading to a gap reduction of at least 75% within five years.

Go to the Banana Retail Commitment page

Living Wage Gap

During the first phase, the private sector parties involved provide insight into the gap between current wages and living wage benchmarks. The retailers and farms use the Salary Matrix, made available by IDH, to calculate this difference.

After a third year of data collection, covering wages for the calendar year 2021, the identified living wage gap is 14,96%, covering 86% of the volumes purchased by the Dutch retailers. The second year showed an average living wage gap of 9% for 75% of the volumes purchased by Dutch retailers while the first year showed an average living wage gap of 9% for 42% of the volumes purchased by Dutch retailers.

During the third year of this project, there was a substantial increase in the number of farms submitting a Salary Matrix compared to last year (332 vs. 217 for the second year and 117 for the first year).

First year

During the first year, the IDH Salary Matrix was rolled out by 117 farms across 5 countries, constituting 42% of the Dutch retailers’ total volume of banana supply (exceeding the 33% target for year 1). Some 57% of these farms indicated a living wage gap among at least a portion of their workforce. The Salary Matrices accounted for 15.240 workers in total. Analysis showed that 6.019, or 39%, of workers experienced a living wage gap. The average gap was 9%.

Find out more Living Wage Gap insights from the Banana Retail Commitment

Why a Living Wage?

A living wage ensures that, in a particular time and place, the remuneration received by a worker is sufficient to afford a decent standard of living for the worker and their family.

Elements of a decent standard of living include food, water, housing, education, healthcare, transport, and other essential needs (including provision for unexpected events).

As such, closing gaps between current remuneration and living wages improves a workers’ standard of living and enables structural change to reduce poverty.

Who participates?

The Banana Retail Commitment is signed by Albert Heijn, Superunie, Boni, Boon, Coop, Deen, Hoogvliet, Jan Linders, Jumbo, Plus, Poiesz, Sligro, Spar and Vomar, with the support of IDH, The Sustainable Trade Initiative and the Dutch Food Retail Association (CBL).

The commitment is part of the Dutch Agreement for the Food Products Sector on International Responsible Business Conduct (IRBC).

Cooperation is essential to implement the agreements made. Making the supply chain more cost-efficient and increasing wages is complex and often requires a complex solution. The impact of individual parties can be limited, especially when buyers have a small market share and when suppliers sell their harvest to multiple buyers. Working on living wages, workers’ needs are at the core; for suppliers and workers, it is also important to safeguard the long-term sustainability of the sector, its competitiveness and their jobs. For these reasons, it is important that the entire value chain participates and works together creating solutions to address potential living wage gaps.

What about smallholders?

The project encourages all farms, regardless of size and number of workers, to develop their own Salary Matrix.​

The Salary Matrix can be used for all types of farms, however, IDH recommends the Living Income approach for smallholders (less than 10 hired workers). ​

Nonetheless, the organisation managing the group (cooperative, association, etc.) needs to have a Salary Matrix for the workers directly hired by such organization. 

How is a living wage benchmark calculated?

There are several organizations that provide support to calculate a decent standard of living in the specific regions. To establish a living wage benchmark, these organizations gather data on local costs of, among others, food, housing, education, healthcare, transportation, and more.

To understand the wage that is needed for one worker to afford such costs of living, these costs are divided by the typical number of wage earners in a family and the mandatory deductions (such as social security or taxes) are accounted for.

How do I know the living wage for a sector in a region?

Estimated values of a living wage, what we call living wage benchmarks, are published by various organizations using their own methodologies.

To establish a living wage benchmark, these organizations gather data on local costs of, among others, food, housing, education, healthcare, transportation, and more (as aligned with global standards, such as the World Health Organization and The Food and Agriculture Organization).

Who calculates living wage benchmarks?

Benchmarks are developed by independent researchers, not by IDH or companies involved in this project.

For example: benchmarks developed by the Global Living Wage Coalition using the Anker methodology.

How do I know which Living Wage Benchmark to chose?

IDH recommends using benchmarks developed by the Global Living Wage Coalition. Additionally, IDH acknowledges that there are other methodologies available to calculate living wage benchmarks.

We have developed a process to recognize other robust living wage benchmark methodologies that are available in the market which can be used when an Anker methodology benchmark is not available.

How to measure current remuneration?

To calculate current remuneration (including wages, bonuses, and in-kind benefits), IDH developed the Salary Matrix which is free for all to use. Once remuneration is calculated, this tool can also compare it with the living wage benchmark to provide insight into the living wage gap.

How to calculate the gap towards the established living wage?

To better understand the living wage gap — how far away workers are from earning a living wage — in a given production location, we can compare the living wage benchmark with current remuneration. IDH offers a free tool for these calculations: the IDH Salary Matrix.

The IDH Salary Matrix aims:

• To help calculate current remuneration including bonuses and in-kind benefits
• To compare against living wage benchmarks
• To unveil barriers and find solutions together with suppliers and retailers
• To track and trace yearly progress over time
• To support your work with certification programs that are introducing requirements on living wages
• To raise awareness in the entire sector

The information you include in the Salary Matrix will only be seen by the suppliers and retailers you agreed to share the information with, and by IDH. In the future, if you want to share your Salary Matrix with a specific certification program, you will be able to do so.

Where has the Salary Matrix been used?

The Salary Matrix has been tested so far across five sectors (bananas, pineapple, tea, coffee and flowers) in 11 countries.

What kind of activities will be implemented to close potential gaps?

Future solutions to reduce living wage gaps will be designed through dialogue between producers, workers’ organizations, suppliers, and retailers. Activities will vary depending on the conditions in each farm, supply chain or country.

Producers are in a leading position to design projects to address living wage gaps in their farms, regions, countries. IDH, suppliers and retailers can co-finance projects in the next five years.

Where is this effort being implemented?

In all farms with hired labor that produce bananas purchased by participating retailers.

IDH will also continue to invite other interested private sector parties to join the Banana Retail Commitment. This will increase the positive impact on living wages.

When?

Timeline 2019-2025

Support

IDH’s role in this project is to:

• Develop necessary tools to collect information from participating producers (Salary Matrix).
• Generate aggregated reports for suppliers and retailers based on the information collected from participating producers.
• Support the annual monitoring process and the publication of annual progress reports.
• Support the design and co-finance projects aimed at developing business models to close living wage gaps, as long as there is private sector contribution

What kind of support can I have using the Salary Matrix?

We are also providing support through a recorded webinar on how to complete the Salary Matrix. There is also support from trained representatives from the companies that you sell your bananas to.

Join!

With your help, we can have a significant impact

Please contact Ronald Sanabria for more information

• Back to banana retail commitment page

  More info