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

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

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The minimum wage initiative will extend to 65,000 direct suppliers and several thousand agricultural companies, purchasing director David Ingram told CNN Business. Unilever (UL) is one of the largest consumer goods companies in the world 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 pledged to spend € 2 billion ($ 2.4 billion) annually until 2025 with suppliers owned and managed by people from underrepresented groups, including women and blacks, compared to € 300 million ($ 363 million) today.
“The two biggest threats facing the world today are climate change and social inequality. The past year has undoubtedly increased 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 aggravating the divide.
This will only increase pressure from activists and consumers for companies to tackle inequality. Several clothing retailers, including H&M (HNNMY) and Alone (ASOMY), pledged to pay decent wages in their clothing supply chains. And the main German supermarket chains, including Aldi and Lidl, last year signed a voluntary agreement to promote decent wages in their supply chains.

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

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

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

Countries in Africa and South America, and others that supply Unilever with important commodities, such as India, Malaysia and Indonesia, will be prioritized.

Martha and Richard Anker, partners in the Global Living Wage Coalition and creators of the Anker Methodology to estimate a minimum wage, said Unilever’s commitment is a “very positive step” by a leading company that could serve as an example for other companies.

“It is important that this is done with full transparency [and] the minimum wage and vital income goals they have set in different parts of the world are determined independently … and not something that Unilever is in any way defined or influenced, “they told CNN Business.

Unilever currently requires its suppliers to pay legal minimum wages. Ingram said he will work with NGOs, suppliers, other companies and governments in an effort to establish decent wages for the countries where he operates.

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

The cost of a minimum wage

Subsistence wages are often considerably higher than minimum wages, which can be extremely low in the poorest countries. In Côte d’Ivoire, where Unilever purchases cocoa beans for its Magnum ice cream, the rural life wage for 2020 was 68% higher than the national minimum wage, according to a report by the Global Living Wage Coalition.

Asked whether Unilever’s margins would be squeezed by its commitment to a minimum wage, Ingram said there would be a cost to the company and its suppliers, but 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 agricultural systems in poor countries can increase crop yields and increase farmers’ incomes. “We are not sure what the difference and cost will be, but what we are sure of is that the consumer will not end up paying more,” he added.

But Fairtrade International said that price should be an “integral part of any minimum wage promise” to avoid negative impacts on producers and their workforce. “There is a correlation, for example, between very low wages on tea plantations and consumer prices,” Wilbert Flinterman, senior adviser on workers’ rights and union relations, told CNN Business.

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

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