Creating a framework for fair compensation.
Building a framework for action
A skilled, motivated and engaged workforce is essential to achieving our growth ambition. Fair compensation is an important factor to achieving this.
In 2013, Oxfam released a report - ‘Labour Rights in Unilever’s Supply Chain' (PDF | 947KB) - which focused on our Vietnamese operations. Following the report, we committed to undertake a global sustainable living review by analysing the compensation practices in the countries in which we employ people directly.
The follow up report - Labour Rights in Vietnam – Unilever’s Progress and Systemic Challenges – was released in 2016 and acknowledges that significant improvements have been made. Oxfam also acknowledges the complexity of some of these issues means that they can only be effectively and systematically addressed by engaging with peer companies, civil society, trade unions and governments. We remain committed to addressing these issues and will continue to play our part in both dialogue and driving action to create positive, lasting change for those who play such a key role in the success of our business.
Assessing our practices
During 2014, we engaged the Fair Wage Network (FWN) to conduct a research review of the entry level employees in our factory sites in 38 countries against a variety of Living Wage indicators. FWN works to promote better wage practices through working with businesses, NGOs, worker representatives and researchers.
During 2015 we worked with the FWN to develop a Framework for Fair Compensation. In December 2015 this was agreed by our Human Resources Leadership Team. The Framework outlines, in a structured way, how the various existing elements of our compensation packages deliver fair compensation to our employees and is supported by a methodology to monitor our employees’ rewards against relevant Living Wage benchmarks. Our 2015 analysis reviewed all our lowest paid employees’ fixed earnings levels, for both factory and non-factory employees.
This work enabled us to set a target to achieve full Living Wage compliance for all our 169,000 direct employees by 2020, which we announced in spring 2016. Each country will be required to report their compliance status annually.