German Retailers Working Group on Living Income and Living Wages
Farmers in global supply chains are to be enabled to earn living wages and incomes. This is the goal the German Retailers Working Group on Living Income and Wages was formed to achieve. At the 2020 International Green Week, representatives of the German retail sector signed a joint voluntary commitment undertaking to actively work towards developing and implementing responsible business practices in their global supply chains.
Federal Development Minister Gerd Müller described the alliance as a milestone on the way to fairer global supply chains. After the signing at the 2020 International Green Week, he congratulated the participating corporations ALDI Nord, ALDI SÜD, REWE Group, Lidl, Kaufland, dm-drogerie markt and tegut:
„Seven major German retailers have committed themselves to ensuring a living income along their supply chains. It’s good to see movement in food retail. A short while ago, no one would have thought this was possible, and it also shows that consumer pressure is effective.”"
In forming this alliance the German retailers hope to use their significant leverage to exert a positive influence on producing and processing companies within their supply chains, thereby helping smallholders and workers around the world to achieve an appropriate standard of living from farming agricultural raw materials such as coffee, cocoa, cotton or bananas.
The working group has defined a scope of action for its work:
Living Wages throughout the Banana Sector
During a Kick-Off event that was held on December 9th, the German Retailers Working Group on Living Income and Living Wages officially presented the activities of the pilot project on Living Wages in the banana sector. Following the opening remarks by Ecuadorian minister for agriculture, Pedro Alava González, and German ambassador to Ecuador, Dr. Philipp Schauer, members of the Working Group presented the project’s planned actions. Afterwards, there was a discussion between Sarah Bollermann from ALDI SÜD, representing the retailer AG, Sebastian Lesch from the German Federal Ministry for Economic Cooperation and Development (BMZ), Juan José Pons as representative of the banana cluster Ecuador, and Alistair Smith from Banana Link on the expectations of the project as well as its challenges and potentials.
Vision for the banana sector
The Working Group is convinced, that in order to effect sustainable change and provide secure livelihoods for local communities, action on Living Wages throughout the entire European market is needed.
Therefore, Working Group members ALDI Nord, ALDI SÜD, Kaufland, REWE Group and dm-drogerie markt have agreed to gradually integrate Living Wage criteria into their own brands’ entire banana portfolio. Their goal is to proactively contribute to a transformation of the banana sector through various means.
Living Wage criteria will be developed and piloted in 2022 by means of a participatory dialogue and consultation process with supply chain partners as well as other relevant actors. Definition and implementation of these criteria shall follow the principle of shared responsibility, shared reward and shared risk between the respective actors within individual banana supply chains. Core criteria will encompass responsible purchasing practices and the strengthening of workers’ representation bodies. As of spring 2023 bananas fulfilling Living Wage criteria are expected to be available in retailers' markets, that include fresh banana.*
Banana sourcing volumes complying with Living Wage criteria will be increased continuously over the next few years according to the following previously defined milestones:
First pilot project
Starting point for the implementation of the German retailers' sector initiative is a pilot project in Ecuador. This first joint project acts as a pilot to understand, test and adjust viable approaches to promote living wages in banana supply chains. In addition, it serves as a blueprint to adopt and expand good practices in further sourcing countries beyond Ecuador.
Ecuador was chosen as a first pilot project, because it is an important, if not the most important, sourcing country for bananas for all Working Group members. The project and related activities are expected to be extended to other sourcing countries in 2023.
Wage gap analysis as a foundation
Although current evidence indicates a relatively small wage gap in Ecuador, detailed information on the wage situation of workers in the banana supply chains of German retailers is not yet available. To obtain a comprehensive overview of the wage situation, Working Group members are analyzing wage gaps for as many of their Ecuadorian supplier as possible using the IDH salary matrix and working in close consultation with suppliers and producers. Additionally, all wage data and gaps shall be validated by a third party. A report of the aggregated results is expected to be published in the spring of 2022. Furthermore, by the end of 2022 additional reference countries are planned to be included in the wage gap analysis.
Closing possible wage gaps
If wage gaps are found on a plantation, retailers aim to contribute to closing the gap by paying an individual price premium. This is one of the core elements of the Living Wage criteria. The calculation and payment of the price premium will be done individually in relation to the particular wage gap and the quantities purchased by the respective retailer on the plantation.
To calculate the necessary price premium, while including producers and workers' representatives, GIZ has developed the "Living Wage Costing Tool". Based on farm specific wage data, different scenarios for reducing and closing wage gaps are calculated and corresponding price premiums are determined, while also taking into account the specific wage structures of the farm.
The main goal is to support producers in calculating additional labor costs needed to promote living wages and as a result strengthen producers’ negotiating position. In the coming year, the tool will be tested in pilot measures with producers, suppliers, and retailers. Based on the learning experiences of all participants, it will be further developed and continuously improved.**
Erik Hollmann
Director Corporate Responsibility Quality Assurance International
“Our business model should not be at the expense of third parties. We interpret the Ecuadorian banana project as a starting point for accomplishing the payment of living wages in other sourcing countries in the long-term. Ensuring a level playing field is essential for the retail´s engagement such as the Voluntary commitment on living wages and living income.
Key to success as well as to a sustainable development is the close cooperation with relevant stakeholders, such as competitors, local organizations, politics, producers and standard giving organizations. The banana project in Ecuador is therefore a pathbreaking approach implementing a long-term improvement of the human rights situation in other sourcing countries.”
Sarah Bollermann
Director Corporate Responsibility International
"ALDI's vision is for a sustainable banana production where the costs are shared fairly by all relevant stakeholders in the sector, and where it can be guaranteed that higher prices paid for bananas are directly benefiting farm workers. This can only be achieved, and the livelihoods of workers lastingly improved if everyone works together."
Kerstin Erbe
Executive Director, responsible for the product management department
"At dm-drogerie markt sustainable business practices and social responsibility are part of our philosophy. We therefore work with partners who consider ecological and social responsibility along the value chain a priority. We see living wages as an integral part of sustainable value chains.
For us, the German Retailers Working Group on Living Wages and Incomes is a platform for mutual learning and creating synergies with the participating companies and GIZ. The project in Ecuador is an opportunity to gain practical experience and transfer it to other supply chains and commodities."
Stefan Lukes
Managing Director Purchasing International
"Workers and smallholders should not have to worry about their livelihoods in the long term - that is our vision and we are committed to achieving it with all the means at our disposal. But we cannot achieve this goal alone: Only through the close cooperation of all key stakeholders, as in this project, can we really make a difference in the producing countries."
Eugenio Guidoccio
Director Fruits & Vegetables, REWE Group
"The REWE Group has been committed to improving living and working conditions in fruit and vegetable producing countries in order to strengthen the economic situation of small-scale farmers and farm workers in particular for several years. It is important to us to develop joint solutions for the entire sector within the INA working group that support sustainable cultivation and improve the situation of the local people concretely and sustainably. Our project in Ecuador is an important step for us in expanding our commitment to fair trade. Living incomes are the basis for addressing the extensive challenges in the banana sector."
Dialogue and cooperation for fair procurement practices
To develop scalable and verifiable approaches for fair procurement practices as a means of promoting living wages, the Working Group is collaborating closely with various standard-setting organizations. Pilot activities on this measure are planned for the upcoming year, such as ensuring a verifiable transfer of the price premium through the supply chain and setting up payout mechanisms on farm-level.
At the same time workers’ representatives and, where possible, trade unions are foreseen to be trained and strengthened on the farms that supply to working group members. These trainings are to follow a gender-sensitive approach and address the topics of workers' rights, decent working conditions, and women's empowerment.
In cooperation with GIZ Ecuador, the Working Group engages in a regular exchange with producers, suppliers, and other relevant stakeholders in Ecuador to include their ideas and perspectives as well as to reflect on the activities of the WG in general. This exchange is to be further consolidated in the coming year.
Reviewed by the Federal Cartel Authority
The project was reviewed by the German Federal Cartel Authority and classified as noncritical under German competition law. Thus, the Group is setting an example for the compatibility of such a sustainability initiative with antitrust law.
* Applies to all retailers with fresh banana portfolios. In the case of dm-drogerie markt - as a retailer without fresh bananas in its portfolio - processed Cavendish bananas in own-brand products.
** It is ensured that no company-specific information on costs or other strategic information of one member is disclosed to another member through the use of the Living Wage Costing Tool.
SPANISH
Hacia Salarios Dignos en el Sector Bananero
El 9 de diciembre, el Grupo de Trabajo de los Minoristas Alemanes sobre Salarios e Ingresos Dignos presentó oficialmente en el acto de lanzamiento del Proyecto Piloto sobre Salarios Dignos en el Sector Bananero las actividades contempladas dentro del mismo. Después de los saludos del Ministro de Agricultura ecuatoriano, Pedro Álava González, y del Embajador de Alemania en Ecuador, el Dr. Philipp Schauer, los miembros del Grupo de Trabajo presentaron las actividades previstas del proyecto.
Después Sarah Bollermann de ALDI SÜD, en representación del grupo de trabajo de los minoristas, discutió con Sebastian Lesch, del Ministerio Federal alemán de Cooperación Económica y Desarrollo (BMZ), Juan José Pons, Coordinador del Clúster Bananero de Ecuador, y Alistair Smith, Coordinador internacional de Banana Link sobre las expectativas sobre el proyecto, así como los retos y potenciales.
Visión para el sector bananero
El grupo de trabajo está convencido de que en todo el mercado europeo se deben desarrollar acciones que conlleven hacia los salarios dignos en el sector bananero, con el fin de permitir un cambio sostenible y proporcionar un estándar de vida seguro para la población de los países productores.
Por lo tanto, los miembros del grupo de trabajo ALDI Nord, ALDI SÜD, dm-drogerie markt, Kaufland, Lidl y REWE Group han acordado integrar gradualmente criterios del salario digno en el portafolio de banano de sus propias marcas. El objetivo es contribuir de forma proactiva a la transformación del sector bananero mediante diversas medidas.
Los criterios del Salario Digno se desarrollarán y pondrán a prueba en 2022 como parte de un proceso de diálogo y consulta participativa con los socios de la cadena de suministro y otros actores relevantes. La definición y aplicación de los criterios se basará en el principio de "responsabilidad compartida, recompensa compartida, y riesgo compartido" entre los actores de las respectivas cadenas de suministro de cada minorista. Por lo tanto, una política de compras responsable por parte de los minoristas y el fortalecimiento de los representantes de los trabajadores desempeñan un papel fundamental.
A partir de la primavera de 2023, las primeras bananas que cumplan con los criterios del Salario Digno se comercializarán en los supermercados de los minoristas que ofrecen bananas frescas*.
Los volúmenes de banano que cumplen con los criterios del Salario Digno se incrementarán continuamente en los próximos años de acuerdo con los siguientes hitos previamente definidos:
El proyecto piloto
El punto de partida para la implementación de la iniciativa sectorial de los minoristas alemanes es un proyecto piloto en Ecuador, el mismo que servirá para poner a prueba los enfoques y desarrollar un modelo de gestión para ampliarlo en otros países proveedores.
Como primer paso, el grupo de trabajo acordó realizar este proyecto piloto en el sector bananero ecuatoriano, ya que el Ecuador es para todos los miembros del grupo, un importante país proveedor de banano, si no el más importante. El proyecto y sus actividades se ampliarán a otros países proveedores a partir de 2023.
El análisis de las brechas salariales como base
Aunque hay indicios de que en el Ecuador la brecha salarial es relativamente pequeña, todavía no se dispone de información precisa sobre la situación salarial de los trabajadores dentro de las cadenas de suministro de banano de los minoristas alemanes. Para obtener una visión global de la situación salarial, los miembros del grupo de trabajo actualmente están en estrecha comunicación con sus proveedores y productores para analizar las brechas salariales en el mayor número posible de sus proveedores de Ecuador a través de la Matriz Salarial de IDH. Los datos están siendo validados por un tercero. Los resultados obtenidos se publicarán en un informe a presentarse en la primavera de 2022. Para finales de 2022, el grupo de trabajo tiene previsto incluir otros países de referencia en el análisis de las brechas salariales.
Cerrar las posibles brechas salariales
Si se detectan brechas salariales en una plantación, los minoristas quieren contribuir a cerrar la brecha pagando una prima de precio individual. Este es uno de los elementos centrales de los criterios del salario digno. La determinación y el pago de la prima de precios respectiva se realiza individualmente en relación con la brecha salarial medida y las cantidades de compra del respectivo minorista en la plantación.
Para poder calcular la prima de precio necesaria en el marco de un enfoque participativo con los productores y los representantes de los trabajadores, la GIZ ha desarrollado el "Living Wage Costing Tool", una herramienta para calcular costos asociados con el pago de Salarios Dignos. La correspondiente prima de precios se determinará a partir de los datos de las brechas salariales, comparando diferentes escenarios para reducir y cerrar esas brechas, teniendo en cuenta las estructuras salariales específicas de las diferentes plantaciones. El objetivo es ayudar principalmente a los productores, a calcular los costos de la mano de obra para promover los salarios dignos y reforzar así su posición negociadora. En el próximo año, la herramienta se probará a manera de piloto con productores, proveedores y minoristas. La misma se seguirá desarrollando y mejorando continuamente en base a las experiencias dentro del proceso de aprendizaje de todos los participantes. **
Diálogo y cooperación para unas prácticas de compra responsable
El grupo de trabajo está en estrecha comunicación con varias organizaciones de estandarización con el objetivo de desarrollar parámetros escalables y verificables para las prácticas de compra responsable del sector minorista que conlleve a promover los salarios dignos. El año que viene también se llevarán a cabo actividades piloto en este marco, por ejemplo, se verificará la repercusión de las primas de precio a lo largo de la cadena de suministro y sobre los mecanismos de pago a nivel de las plantaciones.
Paralelamente a las medidas adoptadas por los minoristas para sus prácticas de compra, se capacitará a los trabajadores y sus representantes, y si es posible, a los sindicatos de las plantaciones que suministran a los miembros del grupo de trabajo. La formación en este marco debe seguir un enfoque diferenciado por género y abordar las cuestiones de los derechos de los trabajadores, las condiciones de trabajo decentes y la capacitación de las mujeres.
El grupo de trabajo junto con la GIZ Ecuador, mantiene una comunicación regular con productores, proveedores y otros actores relevantes en Ecuador para reflexionar sobre las actividades del grupo de trabajo e incorporar sus ideas y perspectivas. Este intercambio se consolidará en el próximo año.
Aprobado por la Oficina Federal alemana de la Competencia
El proyecto fue revisado por la Oficina Federal alemana de la Competencia y clasificado como no crítico con la legislación alemana en materia de competencia. De este modo, el Grupo da ejemplo pionero de la compatibilidad de la cooperación intersectorial en el tema de los salarios dignos con la ley de monopolio.
* Se aplica a todos los minoristas con una cartera de bananas frescas. En el caso de dm-drogerie markt -como minorista sin bananas frescas en su surtido- se trata de bananas Cavendish que se transforman en productos de marca propia.
** Se garantiza que mediante el use de la herramienta ninguna información específica de la empresa sobre los precios u otra información estratégica de un miembro sea revelada a otros miembros.
Downloads:
Contact:
GIZ Germany: Nina Kuppetz, nina.kuppetz(at)giz.de
GIZ Ecuador: Ragna John, ragna.john(at)giz.de