A living wage
Average read time: 6 minutes
Workers deserve a living wage – and fair pay brings benefits for families, communities and our business. We want to raise living standards by ensuring everyone who directly provides goods and services to Unilever earns a living wage or income.
Fairer pay for a fairer world
We know that economic growth is only inclusive and sustainable when workers receive fair wages – and our business flourishes when those around us are doing well.
Making sure that workers earn a living wage helps support economies and fosters growth. And it’s simply the right thing to do for a business that is founded on respect for human rights.
The right to an adequate standard of living is a fundamental human right – sadly one that many of millions of people around the world are unable to access.Professor John Ruggie, Harvard University, former UN Secretary-General’s Special Representative for Business and Human Rights, and member of Unilever’s Sustainability Advisory Council
We're building on our commitment to pay a living wage in our own business: now we have committed to ensure that everyone who directly provides goods and services to Unilever earns at least a living wage or living income by 2030.
What is a living wage or living income?
A living wage or living income is one that gives people enough to provide for their family's basic needs for food, water, clothing, housing, education, transportation and healthcare. It also allows for some discretionary income and includes enough provision to cover unexpected events.
The concept of a living wage applies to hired workers (eg in factories) or merchandisers who help sell products. A living income is applied in the context of any income earner, such as self-employed farmers.
Our living wage commitment for employees
We created our Framework for Fair Compensation (PDF 449KB) (Opens in a new window) in 2014. Through the first of its five principles we committed to pay all our employees a living wage, which we achieved in 2020. We’ve updated our Code of Business Principles to endorse this commitment.
Our Code of Business Principles
Our Code is our simple ethical statement of how we should operate. It states:
“We will provide employees with a total remuneration package that meets or exceeds the legal minimum standards and in line with industry standards in the markets in which we operate. We are committed to giving employees a living wage, ensuring that they can meet their everyday needs.”
Every year, our country leaders confirm that they have complied with our Code. And we require each country business to report its status against the standards of our Framework.
We audit compliance
We check we're paying our employees a living wage by auditing compliance against our Framework each year. Our audits check that:
- fixed compensation is achievable without the need to work an excessive number of hours
- our country payroll processes deliver employees’ full pay correctly and on time, every time
- we have no issues of unequal pay between genders.
We’ve worked closely with the Fair Wage Network (FWN) (Opens in a new window) and others to develop our understanding of living wages. FWN provided an objective external source of the living wage amount for each of the countries where we have employees.
We used these thresholds to assess whether the fixed compensation paid to all our full-time direct employees (including factory and non-factory employees) in each country met our living wage standard – which means employees receive, at the very minimum, fixed and guaranteed levels of earnings that are above their country’s living wage benchmark. In some countries, such as those under the Gulf Cooperation Council, there are no legal minimum wages mandated by the government – which meant we needed to identify a substitute for the legal minimum wage as an initial wage floor or starting level.
Our next step for fairer wages
Fair wages have always been a principle of our Responsible Sourcing Policy (RSP) (PDF 4.86MB) (Opens in a new window) and Responsible Business Partner Policy (PDF 7.79MB) (Opens in a new window), which govern how we ask our suppliers and other partners to do business.
In 2020 we added the principle of a living wage to our Code of Business Principles: “We will work with our business partners to raise standards so that their employees are paid a living wage and are not subject to forced, compulsory, trafficked or child labour.” We also have a specific internal policy for temporary workers in manufacturing who are provided by third parties.
Our internal policy on the Sustainable Employment of Temporary Workers requires in-sourced third-party temporary workers on our manufacturing sites to be given comparable terms and conditions to employees, including the payment of a living wage.
To make our living wage goal a reality, we’ve put an action plan in place that builds on the progress we’ve made through our RSP. We’re looking at where the gaps between actual and living incomes are greatest, where the social safety net for workers is weakest, and where we can make the most impact, based on our presence and scale in local markets.
What does our commitment cover?
We’re focusing on those who directly provide us with goods and services. This covers:
- Tier 1 suppliers and their employees, ie those suppliers who invoice us directly and have a direct contract with us
- our outsourced manufacturing
- our priority agriculture crops.
We’re focusing on the most vulnerable workers in manufacturing and agriculture, and we’ll work with our suppliers, other businesses, governments and NGOs – through our purchasing practices, collaboration and advocacy – to create systemic change and champion the global adoption of living wage practices.
We don't pretend this is an easy process: ensuring that fair wages are paid remains a challenge, particularly as the cost of living rises. Our experience as part of Malawi Tea 2020 illustrates some of the complexities.
Learning from a living wage in Malawi
Malawi Tea 2020 (Opens in a new window) was a multi-stakeholder partnership that aimed to improve the competitiveness and sustainability of the Malawian industry so that workers earn a living wage and small-scale farmers earn a living income.
At the end of the five-year programme, a third of the living wage gap had been closed for 50,000 tea workers – showing that progress can be made, but that it remains challenging.
Learnings from partnership included the importance of agreement on living wage methodologies, the important link between improved product quality and wages, and critically, verification from producers that they benefited from improved quality.
Obtaining feedback from workers is an area that needs to be strengthened. Engagement with trade unions and support for collective bargaining was a vital element of this work, as was the development of an innovative sustainable procurement model. Another concern was potential unintended consequences of focusing on wage increases in one country due to its effect on sourcing from other countries. A further consequence of increased wages in Malawi was that it pushed workers into a higher tax band.
These issues underline the importance of a multi-stakeholder approach – including producers, traders, buyers, retailers, trade unions, NGOs, development partners and governments – when working to increase wage standards sustainably in global supply chains.
Advocacy for change
Advocacy and collaboration will play key roles in our efforts to raise living standards through living wages and incomes, because many stakeholders must be involved in creating an enabling environment. We’ll advocate living wages through existing collaboration platforms and by forming new public-private alliances at the country level, as well as engaging in dialogue with governments.
We aim to mobilise like-minded companies to close the gap between minimum and living wages and incomes in their operations, influence governments to institute and implement living wage and income policies, and to build cross-sector coalitions to drive systems change on living wages/incomes.