Unilever, the owner of Ben & Jerry’s and Dove, promises every worker in its global supply chain a living wage

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The living wage initiative will be extended to 65,000 direct suppliers and several thousand agricultural enterprises, purchasing director David Ingram told CNN Business. Unilever (the) is one of the world’s largest consumer goods companies, and its supply chain includes more than 1.5 million farmers, according to its website.
In a statement, the owner of Ben & Jerry’s and Dove It has also committed to spend € 2 billion ($ 2.4 billion) annually by 2025 on suppliers owned and managed by people from under-represented groups, including women and blacks, up from € 300 million ( $ 363 million) at present.
“The two biggest threats facing the world today are climate change and social inequality. Last year undoubtedly widened the social divide,” said CEO Alan Jope.
The coronavirus pandemic has exacerbated global inequality and is expected to increase extreme poverty – defined as living on less than $ 1.90 a day – for the first time in more than two decades, according to the World Bank. Unequal access to vaccines between rich and poor countries risks exacerbating the division.
This will only increase the pressure of activists and consumers for companies to fight inequality. Several clothing retailers, including H & M (HNNMY) and Asos (ASOMY), undertook to pay the living wage in their clothing supply chains. And the big German supermarket chains, including Aldi and Lidl, signed a voluntary agreement last year to promote living wages in their supply chains.

But few companies have global Unilever coverage. The consumer goods giant sells more than 400 brands in 190 countries, and its products are used by 2.5 billion people.

Unilever said the wage should allow workers to break the cycle of poverty. “It allows people to afford a decent standard of living, covering the basic needs of a family: food, water, housing, education, health care, transportation, clothing; and includes a provision for unexpected events,” she added.

The commitment is part of the company’s sustainability goals, which include plans to give up fossil fuels in its laundry and cleaning brands and make all 70,000 biodegradable products over the next decade.

Countries in Africa and South America and others that supply Unilever with key goods, such as India, Malaysia and Indonesia, will have priority.

Martha and Richard Anker, partners of the Global Living Wage Coalition and creators of the Anker Methodology for Estimating Living Wages, said Unilever’s commitment is a “very positive step” for a top company that could set an example for other companies.

“It is important that this is done with full transparency [and] the living wage and income targets they set in different parts of the world are determined independently … and not something that Unilever sets or influences in any way, “they told CNN Business.

Unilever currently requires its suppliers to pay the legal minimum wage. Ingram said he would work with NGOs, suppliers, other businesses and governments in an effort to set the living wage for the countries in which he works.

“The core of what we are trying to do is make a systemic change [and] wide enough for sectors and governments to ideally establish living wages as a natural basis, “Ingram said.

The cost of a living wage

Living wages are often considerably higher than the minimum wages, which can be extremely low in poorer countries. In Ivory Coast, where Unilever supplies cocoa beans for its Magnum ice cream, the rural living wage for 2020 was 68% higher than the national minimum wage, according to a report by the Global Living Wage Coalition.

Asked if Unilever’s margins would be squeezed out of its living wage commitment, Ingram said there would be a cost to the company and its suppliers, but it would be “absorbed into the value chain” and in some cases covered by helping suppliers to be more productive.

For example, the development of sustainable farming systems in poor countries could increase crop yields and increase farmers’ incomes. “We are not exactly sure what these gaps and costs will be, but what we are sure of is that the consumer will not end up paying more,” he added.

But Fairtrade International said price must be an “integral part of any living wage commitment” to avoid a negative impact on producers and their workforce. “There is, for example, a correlation between very low wages in tea properties and consumer prices,” Wilbert Flinterman, chief adviser on workers’ rights and union relations, told CNN Business.

“The complete closing of the pay gap will depend on the commitment and collaboration between different actors in the supply chain – from producers to traders and retailers,” he said.

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