Including the concept of Living Wage
The next step towards making the Bonsucro Standard more inclusive and resilient.
From its start, the Bonsucro Production Standard has mainly focused on environmental and economic sustainability. This is also true for many other certification organizations. But because the Bonsucro Standard is currently in the process of being revised, now is the perfect time to focus on the development of social sustainability. Although this aspect is already being considered, nevertheless, there’s still room for improvement!
Quick acces index to the next issues on this page on Living Wage:
1. Why is the concept of a living wage key for the Bonsucro standard?
- Because current minimum wages don’t cover local costs of living
- Because including a living wage in the production standard will help achieve Sustainable ...
- Because the European Union and its members states are making diligence requirements throughout the ...
Social aspects are often not reflected in audit reports. These are issues like extremely long working days, piecework rates that are far below a living wage, not getting enough break time, and not having enough drinking water.
The concept of living wage could be a solution to the negative impact of certain issues, such as
- child labour
- forced labour
- health risks caused by working too many hours under conditions that are too stressful.
The living wage concept guarantees workers a standard work week as defined by the International Labour Organization (ILO ) and a decent wage so workers can support their families.
Throughout the world, quality standards such as RSPO, the Round Table on Sustainable Palm Oil, are increasingly incorporating the living wage concept.
Draft revisions of the Bonsucro standard were presented during the public consultation. These drafts included measures specifying a maximum number of working hours. An action to eliminate gaps between the living wage was also presented.
This is good news! Including these topics greatly strengthens the credibility of the new Bonsucro Production Standard. These are positive measures that demonstrate Bonsucro’s commitment to including responsibility for social sustainability in its Standard. This means Bonsucro is becoming a broad, robust, credible, and reliable Standard. These steps align the Standard with the Sustainable Development Goals of the United Nations 2030 Agenda.
Because current minimum wages don’t cover local costs of living
The current Bonsucro Production Standard refers to a national minimum wage to guarantee a decent income for workers. In most countries, minimum wages are regulated by legislation.
Minimum wage settings are stated in International Labor Standards, particularly in Article 3 of ILO Convention 131, the Minimum Wage Setting Convention of the tripartite International Labour Organisation of the United Nations. They should take into account the needs of workers and their families, as well as economic factors.
The established minimum wages should consider the:
- “needs of workers and their families,
- taking into account the general level of wages in the country,
- the cost of living,
- social security benefits,
- and the relative living standards of other social groups”.
Bonsucro has conducted a study that explored the possibilities of including a living wage in the Bonsucro Production Standard. It mentions that in many sugar producing countries, the nationally legislated minimum wage is still not high enough to guarantee a living wage. This is true for countries like Guatemala, Brazil, South Africa, India, and Thailand. Calculations were made using various methodologies (NewForesight, 2020)
There are multiple explanations as to why minimum wages do not guarantee a living wage:
Governments in many producing countries are institutionally too weak to implement public policy for minimum wages and/or ensure compliance
Private sector actors seeking higher rates of profit at the cost of paying low wages
Lack of unionization of workers and the absence of collective bargaining and effective social dialogue.
Businesses play a key role in achieving certain Sustainable Development Goals:
- SDG1 (elimination of poverty),
- SDG 8 (decent work),
- SDG 10, (reduction of inequalities in and between countries)
- SDG 12, (promotion of responsible production and consumption models)
Introducing a living wage to the Bonsucro Standard is a powerful tool which the sector can use to contribute to these SDGs. Many SDGs would be achievable if companies paid their workers a living wage.
- SDG 1, the elimination of poverty, cannot be achieved if workers are not guaranteed a salary that allows them and their families to live with dignity, with full enjoyment of their rights. living wages go beyond eradicating extreme poverty. They aim to ensure that people can afford a basic lifestyle and participate in social and cultural life. A living wage is not a minimum wage. It is not a poverty wage. It is a wage that covers all foundational needs.
- In the case of SDG 8, the poor quality of employment has a direct impact on poverty and inequalities worldwide. Companies play a fundamental role here as they are the main instrument for creating jobs, both with direct workers and throughout the supply chain. Collective bargaining is an integral part of freedom of association. It is a key tool for achieving a living wage that takes into account elements of a dignified life. It includes “access to health, education, quality food, water, housing, transportation , clothing and other items, including contingencies that may occur in daily life ”. That is a living wage.
- According to SDG 10, inequality constitutes a threat to social and economic development. It weakens the growth of countries and fosters global poverty. Supply chains which guarantee a living wage for all workings will decrease inequality in and between countries.
- SDG 12, the promotion of responsible production and consumption models, may only be achieved if supply chains are organized in a way that enables everyone involved to earn a living wage. Sustainable production practices are required to safeguard the environment and protect workers' rights.
The combination of legislation and sectoral cooperation at European level makes it possible to achieve more in the supply chains. Incentives for international cooperation will be reinforced if companies in the Member States are obliged to comply with the same standards in the field of due diligence.
Based on Euro Commissioner for Justice Didier Reynders’ announcement of 28 April 2020, in 2021, the European Commission will likely introduce a legislative initiative regarding mandatory due diligence for companies (see EU study on due diligence requirements through the supply chain). The European Trade Union Confederation (ETUC) welcomes general due diligence legislation (ETUC - 2020).
It is expected that the living wage will be a part of these legislative initiatives.
With this legislation, importers will be required to account for the steps they take. They have to ensure that their goods have been produced by workers who are paid a real living wage. This would be especially important in regard to products produced in countries where minimum wages are known not to meet the requirements of the living wage.
The regulation would provide a list of countries where there is no statutory minimum wage or where the wage does not meet the requirements of a living wage.
Importers would then have two options.
They can choose to:
Import exclusively from countries where the statutory minimum wage is a living wage
Carry out due diligence
In regard to the due diligence option production standards like Bonsucro would play an important role. This particular Standard would make sure imported products with Bonsucro certification are produced by workers who are paid a living wage.
2. Implementing living wage - How it works
Including a living wage in the Bonsucro Production Standard adds value to the standard. The main aim of Bonsucro is to set a definition of what sustainable sugarcane production should look like. It wants to maximize the impact the standard has on the future of the sugarcane sector and enhance the added value certification holds for producers.
In order to achieve and maintain a healthy and productive workforce for the sector in the future, and to continue to be seen as a credible standard that meets labour rights and human rights, it is necessary for working hours to be reduced in accordance with the ILO guidelines.
Workers must be able to earn a living wage during standard working hours.
It can be done!
Proven methodologies, like the Anker method,
already exist to calculate a living wage.
Most of the requirements for a living wage have already been included in other sustainability standards. We advise Bonsucro to collaborate with other ISEAL standards on the topic of living wage. These standards are organized in the Global Living Wage Coalition.
Many studies have already been done in the countries where Bonsucro is active.
And it has become easier to do new ones.
The Global Living Wage Coalition has conducted living wage benchmarks for many countries already where Bonsucro members are based. These include:
- Colombia: ‘Living Wage for Caribbean Coast of Colombia (bananas)
- Brazil: ‘Living Wage for Minas Gerais South/Southwestern region Brazil’
- Guatemala: ‘Living Wage for Central Valley Area Guatemala’
- Nicaragua: ‘Living Wage for Managua – Managua Free Trade Zone’
- Nicaragua: ‘Living Wage for Northwest Nicaragua’
The living wage benchmark methodology used is based on the Anker methodology. This very robust methodology has now also resulted in a less resource and time intensive methodology based on reference studies. More information can be found here:
The living wage will be implemented step by step
Bonsucro will be responsible for providing living wage benchmarks and companies will define the living wage gap based on the existing wage data for different types of workers. Further, companies will be required to define an action plan to close the gap by 10% with every re-certification audit. Of course wages must also be adjusted to accommodate for inflation every year. Inflation is usually high in developing countries, and minimum wages are often not adjusted.
A living wage is a result of social dialogue between workers and representatives
To be able to achieve and consistently maintain living wages, it is extremely important to promote social dialogue between the workers (and/or their representatives) and the employers, at company level, and/or multi company level. Collective Bargaining Agreements ideally include wages which are equal to or higher than a living wage. Having a collective bargaining agreement should be a basic requirement in case there is no living wage study available.
And the ISEAL might help!
ISEAL is the 'certifier of certifiers', based in London. Bonsucro is a member of ISEAL. They are supervised by ISEAL to ensure that the procedures are being properly applied and that Bonsucro is complying to ISEAL requirements. ISEAL itself has a strong commitment to the living wage issue. ISEAL is one of the main organizations that has promoted the Global Living Wage Coalition. They play a key role as the headquarters for the Secretariat of the Global Living Wage Coalition. 'ISEAL and the members of the coalition welcome organizations who can help establish the conditions, partnerships, and structures to support the group's long-term goals to achieve increased wages in certified chains towards the level of a living wage. '
3. Who will pay for a living wage?
The costs for a living wage should be shared among all the different stakeholders, producers, traders, end-users, and consumers alike. This is the only way to get support for a living wage. Social dialogue within the supply chain is necessary to achieve this goal.
There are already several examples of methodologies on how to reach an agreement regarding how much it costs to pay workers a living wage.
Price Discovery Model: The public private initiative in the Malawi Tea Sector
One of these examples is the public private initiative in the Malawi Tea sector. Studies done by Oxfam found that tea plantation workers in Malawi, the largest tea-producing country in Africa after Kenya, were living below the poverty line. All plantations, whether owned by foreign or local enterprises, paid the same low wages. The wages were set by the Tea Association of Malawi, which had no plantation worker representatives. Although freedom of association is included in Malawi’s constitution and trade unions on paper, no unions were actually negotiating wages in the tea industry.
In 2010, Oxfam, IDH Sustainable Trade Initiative, and the Ethical Tea Partnership (ETP) launched the Tea Improvement Program (TIP) to improve wages in the tea sector and work towards introducing a living wage. The TIP is a coalition of tea companies, purchasers and dealers, wage experts, trade unions, NGOs, and the Malawi government. After a series of meetings, the TIP set up a Task Force for Collective Bargaining with various unions among its members. The Task Force is chaired by Malawi’s Minister for Agriculture. Also
Experience in the Malawi tea sector has led to the creation of various instruments which are also interesting for the sugar sector, if a living wage becomes part of the Bonsucro Standard. General information can be found on the home page of the Malawi Tea project. Specific information, for example on the price discovery model which has been used, is also interesting to explore.
The salary matrix tool
The salary matrix tool, developed by IDH and Rainforest Alliance, is also interesting and can provide companies with tools to get insight regarding their workers’ salaries .
The involvement of trade unions and collective bargaining agreements is, of course, always key to making agreements sustainable and then monitoring compliance.
In that sense, the tools will help create a more informed social dialogue to establish a living wage.
4. Our proposal for a living wage in the Bonsucro Standard
Including the Living Wage Concept in the Bonsucro Production Standard would be a major step forward and make the Standard future
proof. But this probably won’t be accomplished all at once.
Therefore, we suggest some interim steps, accompanied by a taskforce on workers’ rights within Bonsucro, guided by the Technical Advisory Board of Bonsucro with the participation of Bonsucro members.
Isabelle de Lijser, Living Wage expert, and Maurice van Beers, regional coordinator Latin America of CNV Internationaal explain why living wage would be the next step making the Bonsucro Standard more inclusive and resilient.
Step 1. Create and commit to a timeline to put into force a living wage indicator
Bonsucro commits itself to implementing the concept of a Living Wage in the Bonsucro standard based on the methodology of the Global Living Wage Coalition of ISEAL of which Bonsucro is a member. Provide a timeline which shows the preparation necessary for a living wage indicator. This timeline will be put into force in the production standard and it will include the following steps;
Step 2. Establish benchmarks and calculation models
In countries with a benchmark or reference study
In countries where a living wage benchmark or living wage reference study is already available, Bonsucro is responsible for defining the living wage at plantation level. They can use existing tools, such as the Salary Matrix Tool which IDH has developed, in collaboration with other certification schemes which are part of ISEAL. This tool is usually filled out by the producer. The Bonsucro audits can be used to verify the living wage gap.
According to the new Production Standard, a minimum of 10% growth per re-certification is needed to close the living wage gap. The living wage benchmark should be corrected for inflation to make sure the living wage gap is actually closed and not increasing over time. Bonsucro is responsible for verifying that wage negotiations take place between trade unions and companies. Wages should be negotiated through collective bargaining agreements whenever possible.
In countries without a living wage calculation
For countries where no living wage calculation is available, Bonsucro can use the Salary Matrix Tool to gain insight regarding wages at plantation level. They can then compare these to other existing standards, such as the national or sectoral minimum wage and World Bank Poverty Line. Workers and their representatives at plantation level should be consulted by the farm to understand to what extent workers are able to foresee their basic needs with existing wages. Bonsucro should verify this information during an audit.
If there is no trade union within the company, the national trade union confederation may be consulted to help to organize a local trade union at plantation level, as ultimately it would be best if wages and other working conditions were negotiated through collective bargaining agreements between workers and the company.
At the same time, Bonsucro should make a worldwide overview showing where living wage studies are still lacking. Bonsucro will cooperate with other standards to agree on a division of tasks in commissioning studies. They will make a schedule for the studies which need to be done. Commissioning all the necessary studies may take 1-2 years.
Step 3. Establish a social dialogue for cost distribution
Paying a living wage to workers provides a business case to companies as their workers will be healthier, happier, and probably also more productive. However, it will probably also involve additional costs which will need to be distributed throughout the supply chain. Bonsucro should actively engage and stimulate a social dialogue between stakeholders in the supply chain, including workers, producers, traders, buyers, end-users and their representatives.
In these conversations they can make use of existing tools, like the Salary Matrix Tool and the methodologies which have been used in other living wage interventions. Examples include the Price Discovery Model, which was used in the Malawi Tea 2020 partnership, or other methodologies developed by organizations like IDH and Fairtrade. Social dialogue should be initiated as soon as possible, but not later than 1 year after the new standard goes into effect.
Paying a living wage to workers provides a business case to companies as their workers will be healthier, happier, and probably more productive as well.
Download Factsheet interim steps to include living wage in the Bonsucro standard
To discuss the implementation of Living Wage in the sugar industry, CNV Internationaal organised a webinar with various experts, politicians, and representatives from the financial sector. Members of Bonsucro, stakeholders in the sugar sector, and the general public were invited and attend this webinar last October 2020. Watch this webinar for a broad overview from various perspectives.
Programme and presentations of the webinar
- Introduction on the process for Bonsucro's Production Standard revision and suggested indicators on living wage (presentation)
By Nahuel Tunon, Standards Manager of Bonsucro
- The initiative for a national bill on responsible trade and due diligence
By Joel Voordewind, who presented the initiative in Dutch Parliament
- How the Dutch Platform for Living Wage and Financials is including Living Wage in their approach (presentation)
By Peter van der Werf, international assets company Robeco, team lead engagement
- A roadmap towards a living wage including all stakeholders (presentation)
By Carla Romeu Dalmau of IDH (Sustainable Trade Initiative )
INDEX OF THIS PAGE
- 1. Why is the concept of a living wage key for the Bonsucro standard?
- 2. Implementing living wage - How it works
- 3. Who will pay for a living wage?
- 4. Our proposal for a living wage in the Bonsucro Standard
- Download Factsheet interim steps to include living wage in the Bonsucro standard