Living Wages Pilot - Beyond minimum wage

Eosta is one of the first agricultural trading companies to conduct a living wage research pilot, in close collaboration with IDH and Hivos. 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.

The idea of a living wage is that workers and their family should be able to live a decent life with the remuneration they receive. Thus, a living wage should do more than simply keep workers and their families out of poverty. It should allow them to take care of themselves and their family members, both in terms of housing, food and healthcare.

Up until now most research into living wages have been rather in-depth and elaborate studies. From a corporate point of view, conducting an elaborate social impact study on wages for every product that’s being traded is not feasible. Therefore, this research aims to explore the possibilities of assessing living wages in a relatively quick though accurate manner. It explores living wages from a corporate perspective, in the supply chain of Eosta.

Partnership

Eosta is a member of the SIFAV platform, an initiative from IDH (Initiative for Sustainable Trade). It aims for 100% sustainable sourcing by 2020. One of the focus areas of this initiative is the working conditions and livelihoods of farmers: this initiated the dialogue about living wages. In close collaboration with IDH and Hivos we started looking into the Kenyan organic avocado supply chain. 

Results

The research pilot shows that not all organic avocado farmers are currently earning a living income with the sales of the avocados. The ‘wage ladder’ below shows the farmers income per day. 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.

Lessons learned

  • Living income is considerably harder to assess than living wage. As the income is dependent on many different factors it is rather difficult to quickly assess whether the average farmer earns enough for a decent life. This seems to be an area where further research is needed.
  • Furthermore, living income cannot be discussed without taking the context of the economic market into account. If quality and efficiency are not up to international standards, it becomes almost impossible for farmers to earn a livable income.
  • We designed a ‘quick assessment’ tool (p. 34 of the report) with the key questions per stakeholder to collect the right wage information. This tool should help us with getting an overview of current wages (and gaps) for the different suppliers we work with.
  • Improving wages or income is not as simple as just increasing prices. In order to increase prices at farmer level in a sustainable manner, the different stakeholders throughout the supply chain need to be willing to pay a premium. In this case, transparency throughout the supply chain is an important first step to living wages.
  • An important next step is to communicate the results of this study with the different stakeholders involved in this specific supply chain. We can use the acquired knowledge to start a dialogue with both the exporter and packaging business as well as the farmers.

FAQ

What is a living wage?

The idea of a living wage is that workers and their family should be able to live a decent life with the wage / income they receive. Elements of a decent standard of living include food, water, housing, education, healthcare, transport, clothing and other essential needs including provision for unexpected events (Anker & Anker, 2017).

Who decides what the living wage should be?

The Global Living Wage Coalition (https://www.globallivingwage.org/) is the international body that benchmarks living wages around the world. These benchmarks are verified by Anker & Anker, two researchers who developed a detailed methodology for assessing living wages around the world.

Why Eosta is working on this?

According to the Universal Declaration of Human Rights a worker has the right to “a just and favorable remuneration ensuring for himself and his family an existence worthy of human dignity”. At Eosta we believe that everyone has the right to earn a "living wage". Furthermore, we are convinced that living wages will become an important part of the food production as future consumers will no longer accept that others are living in dire poverty in order to provide us in the West with cheap food.

What was the direct reason for this pilot?

In the world of agriculture there is a tremendous amount of work to be done to ensure that workers earn a living wage. In order for us to get a better understanding of the concept "living wage" in a corporate context, we set up a pilot together with and IDH (the Sustainable Trade Initiative) and the Dutch NGO Hivos. The pilot focuses on the wages earned by people working in the organic avocado supply chain in Kenya. The research was conducted in partnership with one of our organic avocado exporters.

What did Eosta learn from this pilot?

First of all, we learned how to assess current wages and prevailing living wage gaps. Moreover, with the best practices of this pilot we developed a ‘Quick Assessment’ tool for measuring current wages which we can use in the future to assess wage gaps at other suppliers. Farmers receive an income instead of a wage, which showed to be a lot more complex to assess. A farmers’ income is dependent on many different factors, such as quality of the product, size of the land, volume and negotiation power, which makes it hard to estimate what the income of an average farmers is. 

What are the next steps?

We plan to further develop the ‘Quick Assessment’ tool and assess current wage gaps for various suppliers. Moreover, we will focus on quality development in the Kenyan avocado case which will help increase the income of the farmers.

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Download the Living Wages report here.

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