European retailers from four countries are working together to implement living wages in their banana supply chains through an initiative known as ‘Better Together’, supported by the German Development Agency. Recognising the importance of shared responsibility for a supply chain that has for years been characterised by price wars and a ‘race to the bottom’, retailers decided to put competition to the side and look for sustainable solutions. A recent joint statement published by the retailers recognises the complexity of living wage implementation and the importance of working together, both as a retailer group and with suppliers through long-term contracts and responsible purchasing practices. “Collective bargaining is the most sustainable approach to wage improvement, balancing worker rights and economic interests” reads the statement, while acknowledging that this is a process that can take time, and in some contexts requires “structural changes in the enabling environment for effective social dialogue”.
In early February, however, two major European retailers made it clear that they would be forging their own way to implement living wages. Lidl Germany (who pulled out of the German retailer group some time ago but are included in the statement through UK and Belgian subsidiaries) and Sainsbury’s both made their own individual announcements on February 8th. Both opted to establish the payment of living wages through administering an additional premium (in the case of Sainsburys) or bonuses and cash payments (in the case of Lidl). Rejecting the trend of retailers working together to find holistic solutions to complex supply chain problems, they placed value on having made swift decisions to implement living wages: “Sainsbury’s has taken action to address living wages now, three years ahead of the industry commitment”, they reported, while Lidl states that they are motivated by the “aim of becoming the first retailer in Germany to source bananas exclusively from plantations that pay their employees living wages”.
The push to implement living wages in banana supply chains is undeniably commendable, but when it comes to changing the lives of agricultural workers in the Global South, the situation is full of complexities for which there is no ‘quick fix’. Retailers have been squeezing the price they pay producers for bananas for years. With the cost of labour accounting for up to 50% of the total costs of production on plantations, producers have found ways to limit the cost of hired labour in order to remain profitable. This includes subcontracting labour to third party agencies, relying on migrant labour, limiting the number of workers on permanent contracts and relying on casual, part-time and temporary labour, limiting the payment of overtime and paying workers by the box, rather than by the hour, and hiring fewer women workers (see this report, for example). It has also, in some countries, included actions to undermine the functioning of independent workers unions. The low wages that banana plantation workers typically receive are embedded within a culture of employment practices that need to be understood as part of the picture when it comes to implementing living wages. A holistic and joined-up approach is crucial.
Lidl Germany’s announcement shows that they have withdrawn from the other retailers not only in practice but also in principle. Where retailers collaborating under the Better Together initiative have shown a commitment to dialogue and sustainable solutions, Lidl Germany’s approach is top-down, lacking engagement with other supply chain actors and neglects the role of worker representatives and/or trade unions. Their approach is based on deciding how much money a supplier needs to close living wage gaps through reviewing wage data alone: they focus on the numbers and lose sight of the people. They do not consider, for example, the pre-existing wage structures on their supplier farms, and how their approach may be problematic if it means that only the lowest paid workers receive a pay rise, or that workers with longer service, more responsibility, or specialist knowledge are no longer better paid. It will be up to the suppliers to deal with any fall out, and it is a big ask for them to commit to long term increases to worker pay when Lidl – unlike Sainsbury’s – has made no accompanying commitments to signing longer term contracts.
Relying on the leadership of certifications schemes to verify the wages that workers are paid, and / or to administer a ‘living wage premium’ or ‘bonus’ scheme, puts more of the burden of doing the work of living wage implementation on producers. Lidl’s approach relies exclusively on FLOCERT – the independent auditing body of the Fairtrade label – thereby missing the opportunity to encourage social dialogue and requiring supplier farms – even those without Fairtrade certification – to spend more effort accommodating auditors. Producers will have to undertake further compliance activities when they are already at saturation point. The Ecuadorian Banana Cluster – the body representing the interests of banana producers and exporters in the world’s leading banana exporting nation – recently reported, for example, that there was an overlap of almost 60% within the core requirements of nine major certification schemes, and called for the elimination of unnecessary complexities.
There are inherent issues with relying on auditors to certify standards on farms and plantations. Plantations are given advance warning of when audits will take place as standard practice. Temporary, informal and migrant workers can therefore be excluded from audits, sent to other parts of farms and plantations while it takes place. Pre-vetted workers can be told how to answer the auditor’s questions. A recent report looking at agricultural workers in Mexico, for example, showed that two US certification schemes – “fair trade”, by Fair Trade USA, and “Responsibly Grown, Farmworker Assured” by the Equitable Food Initiative – were unable to detect indicators of forced labour or uncover abuses. The report’s findings included the damning statement that “certifications help obscure the fundamentally exploitative dynamics of the agro-export industry”.
By working with certification schemes and completely failing to collaborate with workers’ representatives or trade unions, Lidl’s approach fails to recognise workers as agents of change in their own lives. Even worse, this approach undermines the power of independent workers unions to take a role in negotiating for improved wages and working conditions. Negotiating wages is a core function of workers unions and the living wage movement should be understood as it is: an opportunity to empower unions as long-term partners for change and to implement living wages through collective bargaining agreements that are enshrined in local legislation. This is how retailers can ensure that living wage implementation practices are genuinely sustainable.
A former banana plantation worker and Costa Rican union leader, Gilbert Bermudez, wrote the following in a recent blog:
“The reality is that there exists no mathematic formula that is adequate for calculating the living wage…living wage can only be defined from within the context of mature labour relations and collective bargaining by independent workers unions. Technical, academic methodologies that claim to define living wages for workers, in reality have the effect of excluding them from participating in a process in which the outcome directly affects their lives.”
“In all scenarios, there is no magic formula for defining the living wage – rather there exists a practical formula: a formula that is not defined by academics in London and implemented from above, but is genuinely context-based, and that comes from the ground – from plantation-level reality, from stable, mature labour relations…”
