Advancing living wages: Why more innovative collaboration is critical

The ALDI SOUTH Group has had a commitment to roll-out ‘living wage bananas’ in our UK  and German markets for some time. 

We have always had a strong belief that this isn’t something that ALDI could do on its own. It was clear that if we wanted to pay a living wage to banana farm workers, a sector wide approach was needed. We now work closely with other retailers who also want to drive this change. We share lessons learned, align on tools, and jointly tackle challenges. This inclusive approach is the most promising way to ensure sustainable living wages that consider both the capacities of producers and benefits to workers.

From a commitment to verifying living wage gaps

Having a commitment is an important first step, but subsequent action is essential. The lack of a reliable and scalable approach to verifying living wage gaps has presented a major obstacle to rolling out living wages. This knowledge is crucial to ensure accurate payments can be made, arriving where it is needed and intended: to close workers’ living wage gaps. To get it, banana producers need to have effective attendance record management in place and an understanding of how to identify, quantify and share ‘gap’ information; such as through the use of a ‘salary matrix tool’. While a lot of progress has been achieved in validating tools to verify wages, like salary matrices (thanks to the hard work of the Sustainable Trade Initiative (IDH), the German Agency for International Cooperation (GIZ) and others) reliable verification is still a very ‘open’ issue for ALDI and other retailers.

What is a salary matrix?
IDH has developed a salary matrix to calculate living wage gaps by comparing the total remuneration of workers to the relevant living wage benchmarks for the region. The tool aims to improve wage transparency and promote shared responsibility for addressing living wage gaps. Visit their website for more information.

To address this critical roadblock, we work to strengthen exchange and collaboration with relevant stakeholders and support a scalable and integrated approach. By incorporating wage verification into existing processes, we aim to ensure suppliers and producers are not subjected to the additional administrative and organisational workload that comes with introducing an entirely new process. Engaging with stakeholders, including NGOs and worker representatives, also helps us to ensure an inclusive and informed process of living wage gap identification and verification.

Verification in action

We initiated a pilot project in 2021 with ALDI Nord and other stakeholders, including Banana Link, Heartwood LLC, Dole, Grupo Iren and Banafem. This pilot on three farms aimed to establish how to best involve workers and their representatives in living wage processes and help us understand what worker-led living wage verification in major banana production countries in Latin America could look like. This meant that for the first time we initiated an innovative collaboration that included the entire supply chain; from retailers, suppliers, traders, and farms, to workers, NGOs, and trade unions. 

The project piloted wage verification by different types of trade unions and worker representative groups, as well as by farm worker groups and Fairtrade worker committees. It included several training and support sessions on living wages and the application of a ‘salary matrix’ to support worker representative groups, trade unions, and farm management with application.  

Working with trade unions afforded us new insights into wages from a worker perspective, such as the ability for wage averages to mask fluctuations at certain points in the year. These insights were also well received by farm management, who agreed to continue conversations aimed at finding appropriate solutions. Where an independent trade union was absent, worker representatives and farm management successfully established constructive dialogue, which helped bring transparency to essential topics such as informal labour, holiday work, and seasonal pay differences. 

We believe that without a focus on support, training, and trust-building, fluid and productive dialogue between farm management and trade unions and/or worker representatives may not have been possible, especially as these have not been a feature in previous remote checks or routine audits around wages.

Overall, creating a space for dialogue, collaboration, and trust between these stakeholders meant all parties were more open to sharing and discussing sensitive information. This enabled more accurate wage calculations and a more effective approach to verification. It’s clear from the pilot, this process worked most effectively where an independent trade union was present and involved. 

So how can this approach be taken to scale? 

To take this initiative from pilot to a scaled cross-sector process, we’d recommend companies:

• Give more focus to identifying how workers and worker representative involvement can be integrated into existing activities in support of living wage commitments. The verification piece could be built into already existing dialogues between farm management and worker representatives (which should take place on a regular basis).
• Join up efforts and resources with other supply chain stakeholders, a cross-sector approach can ensure scalability and bring efficiency. 
• Allocate targeted investments to support local trade union and worker representative groups. One stakeholder alone will not be able to shoulder such costs. Supply chain stakeholders should jointly identify ways to incorporate necessary support and training to farms and worker representatives into their approaches.
• Avoid acting - and thinking - in siloes when it comes to driving living wages. To address this, IDH and GIZ have already been highly impactful in linking up the various retailer efforts on living wage bananas across Europe. The World Banana Forum (WBF) has equally achieved important progress on the discussions and work towards living wage bananas. 
• Pilot a worker-inclusive wage verification process: your company will benefit from additional learnings and recommended next steps, more details can be found here.