Summary
Tesco’s latest commitment on ensuring banana plantation workers are paid, at a minimum, a living wage includes two important innovations: independent determination of the living wage requirement and the establishment of a clearly defined timeline for attaining living wage objectives. This approach is indicative of the kind of ‘best practice’ which the EC ‘Code of Conduct on Responsible Food Business and Marketing Practices’ would like to see generally adopted (including in other sector such as the cocoa sector). By concentrating responsibility for establishing living wage levels at the level of the stakeholder with the greatest power within the supply chain, the Tesco initiative offers a real prospect of progress on living wage issues. This would be particularly the case, if it was generalised across products and throughout the corporate family of which Tesco forms a part (ABF).
Following the earlier call from African banana producers for a more equitable distribution of commercial benefits along banana supply chains (see companion epamonitoring.net article, ‘West African Banana Producers Call for a Fairer Distribution of Commercial Benefits Along Banana Supply Chains’, 7 October 2021), the UK supermarket chain Tesco, has announced an extended commitment to ensuring banana plantation workers are paid at a minimum, a living wage (1).
‘Tesco defines a “living wage” as a benchmark wage that is enough to meet a family’s basic needs including food, housing, education, healthcare, transport, and clothing’. The commitment is seen as ‘floor not a ceiling’ in terms of banana worker remuneration (1).
The latest Tesco commitment builds on the 2017 decision to source all its bananas from Rainforest Alliance and Fairtrade certified farms. However, it was highlighted how these schemes did not guarantee ‘workers earn a living wage.’ The living wage benchmark to be used by Tesco has been elaborated in in close association with industry bodies such as the World Banana Forum and other stakeholders bodies.
In realising its stated commitment Tesco’s approach hinges around four elements:
- As of January 2022, Tesco is committed to ‘paying the living wage gap to banana producers (equivalent to the volumes sourced by the company)’.
- Tesco will then hold each of its suppliers to a ‘timebound commitment’ to pay all workers a living wage.
- Tesco ‘will reward suppliers who continue to make progress on closing living wage gaps with higher volumes as part of a balanced scorecard.’
- By January 2024, Tesco ‘will only source from banana producers who pay a living wage to all workers no matter the volumes sourced by Tesco.’
Tesco’s commitment also refers to ‘the importance of freedom of workers to join a trade union and to bargain collectively with their employers’ (1).
According to Tesco, ‘half of their suppliers already pay a living wage to all workers, while among the remainder, living wage gaps were found to range between 2% and 18%.’ However, there are still held to be ‘substantial gaps on many plantations in countries like Dominican Republic, Cote d’Ivoire and the Guatemalan Pacific coast’ (1).
The campaigning NGO Banana Link has welcomed the Tesco commitments (2) and has expressed the hope this will set an example for other retailers to make similar commitments to paying living wages for banana plantation workers and supporting of banana workers being allowed to join a trade union and bargain collectively. This later dimension is seen as the ‘truly sustainable route to living wages for the medium and long term’ (1).
For Banana Link a key principle established through the Tesco commitment is that ‘the final buyer, where the power along the chain is now concentrated, is accepting responsibility for meeting wage gaps through better prices.’ However, Banana Link has also called for two further actions namely:
- Ensuring the ‘validation of current wage data through local trade unions’ and
- Making the ‘ring fencing’ of ‘higher prices conditional on genuine social dialogue and bargaining with independent trade unions’ (1).
| Comment and Analysis Banana Link has highlighted how although similar multiple retailer initiatives are underway in the Netherlands and Germany, the concerned companies need to ‘up their ambitions’, if across the board improvements in living standards in the banana sector are to be achieved in producer countries. While the UK is the main base of Tesco’s operations, up to August 2018 it also had 152 stores in the Republic of Ireland (where in 2019 it accounted for 21% of the Irish grocery market) (2), Hungary (206 stores), Slovakia (154 stores), the Czech Republic (322 stores) and six stores across Spain, Ibiza, Portugal and Gibraltar (3). The Tesco initiative and its proposed implementation modalities could usefully be taken up by other EU member states’ multiple retailers, in the context of both their own initiatives and the EU’s new ‘Code of Conduct on Responsible Food Business and Marketing Practices’. It would give practical expression to Aspirational Objective 5 in the EU Code of Conduct which deals with ensuring ‘sustained, inclusive and sustainable economic growth, employment, and decent work for all’. It would promote the kind of ‘best practice’ competitive dynamic between European retailers on ‘living wage’ issues which it is essential the EU Code of Conduct should promote (see companion epamonitoring.net article, ‘Some Implications of the EU Code of Conduct on Responsible Food Business and Marketing Practices for ACP Producers’, 4 November 2021). However, as has been pointed out by representatives of African banana exporters, in assessing progress on the attainment of living wage objectives, it is essential that all forms of ‘payment’ are considered, including the provision of ‘food, housing, education, healthcare’. These are areas where African banana exporters make extensive investments for the benefit of their workers, given shortcomings in local public sector provision in the countries in which they operate. While it is recognised, putting a value on these ‘payments in kind’ is difficult, it is felt to be necessary in monitoring the dynamic achievement of living wage objectives set out under Tesco’s approach. In this context, particular importance needs to be attached to the ‘validation of current wage data through local trade unions’ and the associated need to allow freedom of association in forming banana sector trade unions. Here again this would appear to be area where the EU’s ‘Code of Conduct on Responsible Food Business and Marketing Practices’ could some in given aspirational objective 6, which involves the promotion of sustainable value creation through partnerships. A further question arising from the Tesco commitment in the banana sector is whether such commitments will be extended to other sectors such as sugar. Tesco’s parent company (Associated British Foods- ABF) has a major stake in African sugar production. This includes the ownership of sugar estates and mills across Southern Africa including in South Africa Eswatini, Mozambique, Malawi, Zambia, and Tanzania. Through its 100% ownership of Illovo, this makes ABF Africa’s largest sugar producer, manufacturing 1.7 million tonnes of sugar per year (4). Against this background the rolling out of the Tesco living wage commitment across agricultural products where the parent company ABF has operations, could make a major contribution to improving living standards for not only its direct workers but for over half a million agricultural producers (4). |
Sources:
(1) Banana Link, ‘Tesco sets an example on living wages for banana plantation workers. Who’s next?’, 26 October 2021
https://www.freshfruitportal.com/news/2021/10/26/tesco-sets-an-example-on-living-wages-for-banana-plantation-workers-whos-next/
(2) Wikipedia, ‘Tesco Ireland’
https://en.wikipedia.org/wiki/Tesco_Ireland
(3) Wikipedia, ‘Tesco international operations’
https://en.wikipedia.org/wiki/Tesco_international_operations
(4) Illovo Sugar, ‘Our Business’
https://www.illovosugarafrica.com/about-us