Growing inequality is a threat to people and business, but understanding what it would take to achieve a living wage for workers is challenging. Companies need practical tools to identify the gaps between what workers are paid and accepted living wage benchmarks, and support to find solutions to reduce the gaps. The Salary Matrix developed by IDH and the Rainforest Alliance provides just such a tool to provide companies with the information they need to improve their businesses and the lives of workers.
The first version of the Salary Matrix was rolled out in early 2019 as part of the project Next Steps in Sustainability: Measuring Impact and Assessing Living Wages. The project analysed the value of salaries, bonuses and benefits at seven pilot farms in Costa Rica and Belize that had volunteered to participate. Information gathered in this pilot served as the starting point for the Salary Matrix.
Since then, the Salary Matrix has become a practical tool that allows companies and organizations to accurately compare compensation for workers with the applicable living wage figures.
Being a producer in a number of countries, Fyffes uses the digital Salary Matrix to calculate the current total remuneration of employees including bonuses and the value provided by in-kind benefits. This allows us to use a single harmonized tool to compare this remuneration with the applicable country living wage benchmark and easily identify gaps, if any. This information then can be used to find solutions in collaboration with all our internal and external stakeholders.
– Julie Cournoyer, Fyffes
Refining the Matrix
In May 2019, IDH began a public consultation process to refine the tool. Private sector partners, certification bodies and others provided valuable feedback that laid the foundation for a stronger tool. Fairtrade, Rainforest Alliance, and others supported the collection of data from tea, banana, coffee, pineapple, and flower farms across eight countries.
All learnings and recommendations were compiled during the first quarter of 2020 and reviewed with support from the Technical Advisory Group of IDH’s Roadmap on Living Wages. The latest digital version of the Salary Matrix is now publicly available on IDH’s website.
Identifying the gaps
Conducting a self-assessment through the Salary Matrix is an important first step to addressing inequality in your supply chain. By identifying gaps at a farm level, companies can raise awareness among their suppliers that allows for a more open and transparent discussion.
Wage gaps identified in the Salary Matrix become the starting point for a conversation that can help reveal the barriers to paying a living wage. The matrix’s data-based approach makes it easier to understand socioeconomic root causes and sector dynamics.
Developing solutions to living wage gaps are not the sole responsibility of farm owners. All private sector actors, including buyers and sellers of produce, as well as workers’ representatives and governmental authorities in producing and buying countries must be involved.
The Salary Matrix is a tool aimed at the production level to:
- Help calculate current remuneration including bonuses and in-kind benefits,
- Compare current remuneration against living wage benchmarks,
- Reveal barriers to a living wage and find solutions with suppliers and retailers,
- Track and trace yearly progress over time,
- Support companies that apply for certification programs with living wage requirements,
- And raise awareness in the entire sector.