Most existing living wage research has focused on one specific commodity and region, however in the case of Eosta, an international distributor of organic fruits and vegetables, this detailed research approach is not feasible. With hundreds of suppliers all across the globe, there is a need for an easier methodology for assessing current wage gaps.
Eosta and IDH conducted a living wage research pilot looking into the organic avocado supply chain from Kenya. This research aimed to collect best practices and develop a more general and easy approach to assessing living wages.
The goal of the pilot, which was conducted in 2018 for a Kenyan avocado supplier, was to find out whether living wages could be used to improve social sustainability measurements. The pilot led to a new Quick Assessment method and showed that a focus on living wages can lead to better connections within the supply chain.
IDH works with Eosta within our fruit and vegetables program: Sustainability Initiative Fruit and Vegetables. Within the living wage research, looking into the organic avocado supply chain from Kenya, IDH has provided technical support throughout, which has had a significant impact on this final report.
Sonia Cordera, program manager at IDH said about the living wages pilot: “this project has enriched our knowledge of living wage that we have gained with other partners in the banana, tea and flowers sector. It’s great to see that a company sourcing a wide range of products like Eosta is willing to investigate the living wage concept in its own supply chain and that, from the experience of analyzing the specific case of an avocado supplier in Kenya, the project was able to develop a quick assessment tool that can be further applied to other suppliers and geographies in the future.”
The aim of this research is to explore living wages from a corporate perspective. This living wage pilot is an exploratory research into the practical application of living wages in the supply chain of Eosta. By conducting an actual living wage research with a corporate supplier, Eosta and partners learn more about available methods, best practices and possibilities for incorporating living wages in the corporate supply chain.
- Based on existing living wage benchmarks assess the current wage gaps of organic avocado farmers and other workers in Kenya
- Use results to facilitate and stimulate dialogue with concerned stakeholders
- Collect best practices for living wage research in a corporate context
- Develop a quick and easy methodology for assessing current wages
Eosta is part of the Sustainability Initiative Fruit and Vegetables (SIFAV), an initiative from IDH, focussing on the key sustaniability challenges in the global agricultural sector. This platform includes all key players sector players who have committed to the SIFAV convenant, aiming for 100% sustainable sourcing by 2020. One of the focus areas of this initiative are the working conditions and livelihoods of farmers, which initiated the dialogue about living wages in the global supply chain, and specifically at an international trading company like Eosta. Accordingly, this research pilot into living wages in corporate supply chain was founded, and conducted in close collaboration with Eosta, IDH and other experts, such as Hivos.
The aim of this research is to better understand how living wages can be analyzed and implemented in the corporate supply chain of Eosta. By focusing on one specific supply chain, organic avocados from Kenya, we get practical experience and hope to draw an overview of the best practices for measuring living wages in a easy manner.
Living wages in Kenya
The goal of this research is not to estimate living wages in Kenya, but to check whether current wages in the supply chain are up to living wage standards. Accordingly, this research pilot makes use of existing living wage benchmarks in Kenya. The Global Living Wage Coalition website gives a clear overview of the Anker & Anker verified benchmarks available for each country. However, at this moment there are only two benchmarks available, which do not represent different regions in Kenya. This is why we also used other sources for collecting wage information.
Anker & Anker benchmarks
At this point, two official living wage studies have been conducted in Kenya by Richard Anker and Martha Anker. The first benchmark is focused on the Lake Naivasha Region from March 2014. According to this study, a monthly living wage is estimated to be 18,542 Ksh per worker with a familily of 1.69 full-time workers. An updated version from October 2016 estimated a living wage to be 22,104 Ksh. After this study was completed, it was concluded that this living wage estimate was not representative of a living wage for rural Kenya. As the workers from the Lake Naivasha case study lived in urban areas near flower farms, and not in rural areas as expected.
The second benchmark conducted by Anker & Anker is from June 2015 in the rural area of Mount Kenya. A living wage in this area is estimated to be 12,969 KSh per worker with a family of 1.71 full-time workers. In an updated version from October 2016 the living wage is estimated to be 13,943 KSh. As prices in the rural Mount Kenya are reasonably representative of prices in other rural areas in Kenya according to the Kenya National Bureau of Statistics, this living wage benchmark can be used for all rural cases in Kenya. According to the authors, this benchmark is in a sense a companion report to the Lake Naivasha non-metropolitan report from March 2014.
At this point, a third benchmark conducted by UTZ / Rainforest Alliance in a peri-urban area in Kenya is on its way. As this benchmark is not officially verified by Anker & Anker (yet), we can therefore only use unofficial figures that are available at this moment. It is estimated that the living wage for a peri-urban area in Kenya is 22,573 Ksh.
Other living wage information
The WageIndicator Foundation also publishes data concerning living wage estimates in Kenya. Their latest update for living wages in Kenya is from January 2018. The WageIndicator Foundation uses prices from the cost of living survey to calculate the living wage in a certain country. It represents an estimate of the monthly expenses necessary to cover the costs of food, housing and transportation, with a 10% margin for other expenses, such as education, health, and clothing. Their living wage estimate is for a full-time worker, which allows to compare to a minimum wage and calculate real wages. According to the WageIndicator website their estimation of living wages is consistent with the methodology developed by Richard Anker and Martha Anker. The living wage estimates from WageIndicator are not specific for one region, but focuses on Kenya as a nation.
The WageIndicator living wage estimate is significantly higher than the Anker & Anker benchmarks for rural and peri-urban. As it is unclear why this estimate is this high, we have only used the WageIndicator data as comparison in this pilot.
Labour policies and laws
- Right now, there are no collective bargaining agreements for the agricultural sector in Kenya.
- No provision in law for unemployment insurance and benefits.
- Social security in Kenya is currently regulated and provided for under many laws. The National Social Security Fund (NSSF) is the largest social security scheme covering almost all of the formal labour force. NSSF is a state-administered provident fund though the government ensures that every worker is provided with minimum social security protection.
- According to the General Wages Order, normal working hours are 52 per week and 60 hours per week for the night workers. Normal working hours per day are not clearly mentioned, however, for young workers normal working hours are 6 per day.
- The workers covered under the National Hospital Insurance Fund Act are entitled to medical benefits in the case of hospitalization and these include general medical care, specialist care, medicine, hospitalization, and transportation.
- The National Social Security Fund Act 2013 provides for old age benefit (pension) when the insured person (male or female) attains the age of 60 years, or retired from regular paid employment.
The research pilot shows that not all organic avocado farmers are currently earning a living income with the sales of the avocados. Right now, 21% of the farmers whom the exporter works with can earn a living income from avocados. These farmers are ranked as ‘extra-large’ farms and together produce the majority of the avocado’s. However, most farmers belong to the ‘small’ or ‘medium’ sized farm, with production levels between 1.000 and 10.000 pieces of fruit a year.
- Research started (June 2018)
- Data collection in Kenya (July 2018)
- Development quick assessment tool (September 2018)
- First conversation with Kenyan exporter about the study (October 2018)
- Report about the research published (November 2018)
With the best practices from this research pilot, we have developed a four-step quick assessment which will be further developed and used for analyzing current wage gaps for multiple of suppliers. The quick assessment focuses on the information deemed essential for a living wage research.
There will also be a dialogue with the Kenyan exporter and farmers about results of this study.