Sunday, June 16, 2024

Living Wage Efforts are On the Rise, But So Are Challenges That Could Undermine Them


Living wages are on the increase around the world. But the impacts of climate change, pandemics, and war may render them worthless, a new study finds.

Leading fragrance manufacturer Firmenich has become the first fragrance company to earn living wage certification for all of its global operations. The certification came three years ahead of schedule.

Firmenich, which produces fragrances for companies including Chopard, Bulgari, and Gucci, worked with the NGO the Fair Wage Network to develop its standards for employees around the world. It’s also a member of other living wage initiatives, including the U.N. Global Compact Decent Work in Supply Chain platform, as well as the (The Sustainable Trade Initiative); Sustainable Vanilla Initiative (SVI); and the Juice Covenant on the juice value chain. It also recently earned recognition by the U.N.’s Global Compact and will now assume a leadership position in the platform.

Firmenich says it’s not stopping with the certification either. “[W]e will now further accelerate our efforts, partnering with suppliers to ensure that fair wage practices become the standard to do business together,” said Firmenich’s Chief Human Resources Officer Mieke Van de Capelle, “this certification will further strengthen Firmenich’s profile as a leading global employer.”

“As a critical pillar of our inclusive capitalism model, our progressive approach aims at creating a positive impact for all our stakeholders, and our employees are key to making us thrive as a responsible business,” Gilbert Ghostine, Firmenich’s CEO said in a statement. “Ensuring that people, wherever they are, earn a living wage is a critical step towards building a more equitable and inclusive workplace and society.”

Living wages

Living wages are defined as providing enough earnings to purchase goods and services that allow workers to achieve a minimum acceptable living standard. That includes access to healthcare, food, housing, and education. Fair Wage Network is one of many working to ensure living wages across the globe.

Fairtrade America, part of Fairtrade International, is also working to ensure workers are paid living wages. It’s one of the world’s most recognizable labels for social justice and sustainability metrics focused on farmworkers.

a farmer
A Balinese rice farmer | Courtesy Who’s Denilo ? | Unsplash

In the recently published Fairtrade America study, Assessing the Impact of Fairtrade on Poverty Reduction and Economic Resilience through Rural Development, the group says farmers in its programs experience better economic resilience, improved social wellbeing, greater environmental sustainability and governance of their cooperatives than farmers not in similar programs.

But the findings also reveal that these programs may become increasingly vital as the world continues to face challenges from climate change to the covid pandemic.

“In times of crisis, it becomes evident that Fairtrade enhances farmers’ economic resilience and supports them in continuing their profession,” Tatjana Mauthofer, researcher at Mainlevel Consulting and co-author of the study, said in a statement.

Currently, about 1.65 million farmers are participating in Fairtrade-type programs, but that’s less than one percent of the world’s farmers, which exceeds 570 million.

The study, which spanned ten years between 2012 and 2022, looked at four key areas of sustainability: economic resilience, social wellbeing, good governance of farmer cooperatives, and environmental integrity. The group evaluated three banana cooperatives in Peru as well as a coffee cooperative there and a cocoa cooperative in Ghana. The findings were compared with similar organizations that are not affiliated with Fairtrade programs.

a truck full of bananas
A truck full of bananas | Francesco Ungaro |Unsplash

Among the key findings, Fairtrade’s foundational price mechanisms, both the Minimum Price and the Premium, offer farmers crucial safety nets, the group says, both for the farm cooperatives and the local communities.

“Additionally, the research pointed to improvements in farming households’ financial situations, such as increased earnings, ability to withstand periods of financial instability, and boosted savings,” the group said. “In one specific instance, coffee farmer members of the Fairtrade certified La Florida cooperative in Peru reported earning incomes 50 percent higher than those of non-Fairtrade farmers.”

Similar results are happening in mining efforts for precious gems and rare earth minerals, too, even though more than half of the world’s mines are still operating unethically. Efforts like SCS Global Services’ recent partnership with the Alliance for Responsible Mining to increase ethical gold mining aim to change that.

Economic challenges

According to Fairtrade America, farmers paid better and given more support systems register higher when it comes to wellbeing indicators such as gender equality and workplace safety.

But the report warns that challenges such as climate change and pandemics like covid, as well as failures to meet the rising costs of farming and daily life, may undermine the benefits of Fairtrade and living wage efforts. Fairtrade America says stakeholders need to fund efforts to adapt to climate change, finance and support farmers in diversifying their incomes, and work to mitigate the impacts of pandemics on vulnerable populations. All of this is tied to sustainable livelihoods and fair wages, the group says.

“We believe that everyone deserves a decent standard of living. It’s only fair to pay a price that covers basic needs and supports an existence worthy of human dignity,” said Peg Willingham, executive director of Fairtrade America.

A coffee harvester in Indonesia
A coffee harvester in Indonesia | Delightin Dee | Unsplash

“This report is critical in helping Fairtrade certified farmers, brand partners and retailers understand the positive impact the Fairtrade system has and the real difference it makes in farmers’ lives. At the same time, it provides us with a call-to-action and urges companies and governments alike to drastically expand the commitments they are making or we will see farmers continue to slide backwards and potentially abandon farming altogether,” Willingham said.

Farming and rural areas are expected to feel the brunt of climate change. A report published today by the UN refugee agency found rising global temperatures could displace more than 200 million people over the next three decades. The report warns this mass climate migration has already begun in some regions, further underscoring the need for action, better wages, and climate change mitigation efforts.

“Either the international community comes together to take action to address this human tragedy, resolve conflicts and find lasting solutions, or this terrible trend will continue,” said United Nations High Commissioner for Refugees, Filippo Grandi.

“These risks are especially great in countries with weak governance and infrastructure and/or insufficient resources,” the report reads.

According to the U.N.’s findings, at the end of 2021, more than 89 million people were forced to flee their homes—an 8 percent increase over 2020 and double the number a decade ago.

Fairtrade America warns that progress toward reducing poverty, “as well as the goal of achieving living incomes,” will be stalled or even reversed “if farmers are not paid more,” Willingham said.


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