Together with the local trade union, Fairtrade and retailers, they measured the living wage gap and increased wages across the entire farm to help reduce inequities.
A socially responsible businesses is a strong foundation for living wages
Volta River Estates, a leading banana producer in Ghana, has made significant strides in closing the living wage gap. Together with the local trade union, Fairtrade and retailers, they measured the living wage gap and increased wages across the entire farm to help reduce inequities. The living wage journey in Ghana reveals the power of working together for better wages and demonstrates the importance of having a foundation of social commitment to support living wage efforts.
Building on Purpose-Driven Foundations and Fairtrade
Volta River Estates, established in 1988 as Ghana’s first commercial banana exporter, was driven by a core social mission: to employ socially and environmentally responsible practices in the production and export of bananas. This joint venture between Ghanaian and Dutch nationals welcomed local unions from the outset, ensuring labor concerns were proactively addressed, and allowing strikes to be averted—a remarkable achievement in the region.
In 1996, Volta River Estates achieved a significant milestone by becoming Ghana’s first Fairtrade-certified banana producer. At that time, they operated a 220-hectare plantation and employed a workforce of 350, 20% of which were women. This pivotal moment marked the beginning of their journey to close the living wage gap. They partnered with Fairtrade to measure and enhance workers’ wages, guaranteeing they earned at least the Fairtrade Base Wage, equivalent to 70% of the Living Wage Benchmark in the region (Lower Volta River benchmark by Anker & Anker for 2019 was GHC 1,244 (USD 240) per month).
Market Demand, Premiums, and Challenges
As market demand for ethically sourced bananas surged due to several European retail commitments, Volta River Estates aimed to pay 100% of the living wage benchmark. They first utilized the Salary Matrix in 2020 to calculate the wage gap and measure their progress. At that time the results showed that nearly 30% of workers were earning below the 2020 Living Wage Benchmark. To bolster wages while maintaining workforce stability in the following years, Volta River Estates decided to introduce a bonus for all workers. This strategic decision ensured that the pay structure remained balanced. As a result, an impressive 98% of their workers were soon earning equal to the living wage benchmark at the time.
However, their journey was not without challenges. Ghana’s minimum wage consistently lagged behind the living wage, and the need for precise and timely living wage benchmarks became critical due to persistently high inflation. First established in 2019, the Living Wage Benchmark is planned to be updated once a year by the GLWC to account for yearly inflation. However, the living wage benchmarks months after the time they should start to be paid. This means producers like Volta River will have no way to meet living wage benchmarks for wages that have already been paid in previous months.
This year’s Living Wage benchmark was published in November, although it took effect in June. This means Volta River is again on a mission to raise wages, but wages can only be adjusted when negotiation happens again with the union. So despite Volta River’s best efforts, they will need to raise wages again substantially to meet the latest living wage benchmark.
Market Demand, Premiums, and Challenges
As market demand for ethically sourced bananas surged due to several European retail commitments, Volta River Estates aimed to pay 100% of the living wage benchmark. They first utilized the Salary Matrix in 2020 to calculate the wage gap and measure their progress. At that time the results showed that nearly 30% of workers were earning below the 2020 Living Wage Benchmark. To bolster wages while maintaining workforce stability in the following years, Volta River Estates decided to introduce a bonus for all workers. This strategic decision ensured that the pay structure remained balanced. As a result, an impressive 98% of their workers were soon earning equal to the living wage benchmark at the time.
However, their journey was not without challenges. Ghana’s minimum wage consistently lagged behind the living wage, and the need for precise and timely living wage benchmarks became critical due to persistently high inflation. First established in 2019, the Living Wage Benchmark is planned to be updated once a year by the GLWC to account for yearly inflation. Still, most living wage benchmarks months are published for after the time they should start to be implemented. This means producers like Volta River will have no way to meet living wage benchmarks for wages that have already been paid in previous months.
This year’s Living Wage benchmark was published in November, although it took effect in June. This means Volta River is again on a mission to raise wages, but wages can only be adjusted when negotiation happens again with the union. So despite Volta River’s best efforts, they will need to raise wages again substantially to meet the current living wage benchmark.
The Future of Wages
Throughout their history, Volta River Estates’ fostered strong relationships with unions and workers which helped ease the journey to paying a living wage. It attracted a more reliable and content workforce and motivated stakeholders in the pursuit of fairness and social sustainability. Notably, the strong worker relationship motivated other nearby farms to also become Fairtrade certified.
Despite the challenges, Volta River Estates’ story serves as a testament to collaboration and a strong commitment to social good. Supported by Fairtrade certification and a robust union presence, it underscores the collective aspiration of achieving living wages. As Volta River continues its mission to close the living wage gap by 2026, it calls on enterprises worldwide to join in this endeavor for the betterment of workers and society as a whole.
This case study was created with information from Volta River Estates and Fairtrade International. IDH has not further verified this information.
Living Wage Action Guide
To explore how you can take action with your supply chain partners to close living wage gaps, please check the Living Wage Action Guide. In this free, online resource you can find more case studies, inspiring examples and practical tips.
