JULY 2020

Living Wage Position Paper
Sustainable Livelihoods: Achieving Living Wages For
Agricultural Workers

The Rainforest Alliance is an international non-profit organization working in
more than 70 countries at the intersection of business, agriculture and forests.
We are building an alliance to create a better future for people and nature bymaking responsible business the new normal.

Introduction
The Rainforest Alliance envisions a world in which people
and nature thrive in harmony. Critical to achieving thisis ensuring that the agricultural producers, workers, andcommunities whose livelihoods are intricately linked tosome of the world’s most diverse ecosystems are able
to achieve a decent and sustainable livelihood for themselves and their families. For the millions of workers worldwide who form the backbone of agricultural production,
ensuring a sustainable livelihood starts with being paid aliving wage.

Box 1

What is a Living Wage, Minimum
Wage and Prevailing Wage?
What is a living wage?
“The remuneration received for a standard workweek
by a worker in a particular place sufficient to afford adecent standard of living for the worker and their family. Elements of a decent standard of living include food,water, housing, education, health care, transportation, clothing, and other essential needs, including provision for unexpected events.”
As defined by the Global Living Wage Coalition and theAnker Methodology.
What is a minimum wage?
A minimum wage is the government set level of wages
which every employer is required to pay by law. A minimum wage establishes a wage floor, beyond which
wages cannot fall, but does not necessarily equal a living
wage. In many places, the statutorily defined minimum
wage is insufficient to meet the basic needs of workers.
Still, some countries do not have minimum wages atall, or, if they do, they are not enforced or supported bystrong collective bargaining rights and institutions.
What is a prevailing wage?
A prevailing wage is the market wage for each set ofskills in a region and industry determined by labor market forces. Usually higher than statutory minimum wages, prevailing wages sometimes fall to levels below thelegal minimum wage in areas where government enforcement is weak or when the industry is struggling to
make a profit.

2

The Problem

should be living wages. This is the underlying purpose behind the ILO Minimum Wage Conventions set decades ago
to ensure full-time workers everywhere do not live in poverty. While minimum wages are mandatory, living wages
are currently still a voluntary measure unless a government chooses to set minimum wage at the level of a living
wage or makes mandatory the payment of living wage by
all companies. Many governments fear that raising minimum wages would make their economy less competitiveand diminish employment opportunities, despite evidence
to the contrary8.

Farm workers are one of the occupational groups with thehighest incidences of extreme poverty, with many workers
often living below the international poverty line of $1.9012
a day. Studies show that the main reason for this is low
wages3. Beyond making up the majority of the rural poor,
agricultural workers are also the most socially vulnerable
part of supply chains4. They often work without formal labor
contracts and access to social security and health benefits5. They are also frequently deprived of effective collective bargaining representation and lack a strong voice inpolicy and decision-making that could help them protect
their rights and interests.

Box 2

Earning a living wage is a fundamental human right recognized by the Universal Declaration on Human Rights (1948)
and the International Labor Organization (ILO) Constitution(1919). It is endorsed as one of the main engines of sustainable development6 and a key driver of the ILO Decent work
Agenda in the Declaration on Social Justice for a Fair Globalization (2018)7. That is why we promote the payment ofa living wage as an important building block for any business to be truly sustainable.

How is a living wage estimated?
The Global Living Wage Coalition and the Anker
methodology
The Rainforest Alliance is a founding member of the
Global Living Wage Coalition (GLWC) the members ofwhich had agreed to a common definition of a living
wage. The GLWC calculates living wage benchmarks inaccordance with the Anker Methodology developed by
the leading living wage experts Richard Anker and Martha Anker.

The drivers of low wages
While many agree that paying a living wage is a key pillarof sustainable development, attaining a living wage is far
from simple. Understanding the problem starts with identifying the factors that contribute to low wages in the firstplace.

The benchmarks estimate the cost of a basic but decent lifestyle for a worker and his/her family in a particular place by adding up the cost of a low-cost nutritious diet that is appropriate for the food preferencesand development level of a country, plus the cost of decent housing in the area, plus other costs for essential
needs like healthcare, education and transportation. A
small margin above the total cost is then added to help
provide for unforeseen events such as illnesses and accidents, to help ensure that these events do not throw
workers into poverty.

1. Low wages are built into business models
Prevailing business models push costs and risks down the
supply chain. This means that the true costs of production at the farm level—including the cost of paying a living
wage—are not accounted for. Some producers are even attimes willing to accept a price that is below their cost of
production just so they won’t lose valuable business. Even
when a farm is profitable, sometimes wages aren’t set fairly to benefit workers in proportion to the profit and performance of the business. In the end, since wages are the partof the cost structure most likely to be impacted by downward competitive pressure, it is workers’ livelihoods that
suffer under the current system of unfair trading practices.

GLWC benchmarks are country and region-specificliving wage standards established independently andvalidated in an inclusive, local stakeholder consultation
process. The reports are publicly available on the GLWC
website and contain valuable tools, such as wage ladders and infographics, that help contextualize and reveal the relationship between minimum wage levels,
industry averages, and living wages.

2. Minimum wages are set too low
Zooming in on the local labor context in many countries,
there is a risk that minimum wages are set too low to adequately support workers’ needs. This is especially thecase if minimum wage laws are not enforced or are notdetermined with input from the workers they impact. Workers’ effective participation in the process of wage-setting
through collective bargaining guarantees that the needs
and concerns of those most affected are taken into account. Collective bargaining is important because it covers all other aspects in addition to wages that determine
the standard of living of workers such as legal benefits,
overtime working hours, sick leave and general terms of
employment, and creates legally binding rights and obligations.
Of course, in an ideal world, minimum wages everywhere33. Informality and low labor rights protection prevalent inagriculture

Achieving a living wage
At the Rainforest Alliance, we have been building an alliance of producers, buyers, unions, governments, and civil society organizations around the world to make living
wages a reality. Throughout our certification, tailored programs, and advocacy work, we have included a number ofinterventions to this end. We believe that living wages will
only become the norm through a multi-stakeholder approach centered around human rights protection.

Finally, even if minimum wages are set at an adequatelevel, a large number of the agricultural workers are employed without formal contracts therefore their rights to aminimum wage and/or benefits under collective bargaining agreements are not protected or guaranteed by the
local laws and regulators. In many rural areas, there is alack of alternative livelihood opportunities and widespread
unemployment. At the same, many governments lack theresources to enforce formal employment contracts or
minimum wages.

2020 Sustainable Agriculture Standard requirements
Our 2020 Certification Program allows companies to take a
step-by-step approach to tackle the complex challenges
in their supply chains. The Rainforest Alliance 2020 Sustainable Agriculture Standard requires that all workers receiveat least the minimum wage in their country and are afforded all the protections under ILO Conventions and Recommendations setting out basic principles and rights at
work13. Going further, farms are required to assess prevailing wages for their workers yearly against the applicableliving wage benchmark , and if there is a gap to develop awage improvement plan with a specific timeline and targets in consultation with workers’ representatives to reach(at least) the level of a living wage14. In every case, wages
have to be adjusted yearly for inflation.

Rainforest Alliance vision
The Rainforest Alliance approach to living wage is fullyaligned with United Nations Guiding Principles for Human
Rights and Business (UNGPs) and accordingly recognizes that the responsibility for achieving living wage must
be shared across the supply chain so that the risks, costs,
and burdens do not fall on the producers alone. Attaining
living wages is a tall order for any producer, government,
or company. Yet in order to achieve the UN Sustainable
Development Goals (SDGs), and for companies and governments to fulfill their responsibility to protect humanrights, all actors need to dramatically scale and speed up
their good practices towards living wages in global supply chains. Rainforest Alliance Certified™ and UTZ Certified
farms have already come a long way in the enforcementof minimum wages where there is no enforcement of local
law and also where the minimum wages are much higher
than average wages or wages paid in the informal sector.
Our vision outlined in the 2020 Rainforest Alliance Certification Program, builds on this work as well as other requirements set out in both of the previous standards to makeliving wages the norm around the world.

Supply Chain actors are thus enabled to take the wage
improvement plans of the producers they purchase from
into account and demonstrate how they are contributing
to the achievement of these objectives.
Our aim is to support certified producers and supply chain
actors to discover and bridge the gap between prevailingwages and living wages. The data we gather in the process
will be used to foster collaboration across the supply chain
and will enable us to report on and verify progress made ina consistent, standardized manner over time.

Living wages as drivers of economic growth

Data-driven developments

According to the United Nations Development Programme,“Poverty eradication is only possible through stable andwell-paid jobs.”9. A living wage is not only a vehicle to solve
the problem of widespread poverty among farm workers,
but also a powerful way to drive economic growth. A recent, extensive empirical study by the ILO on the impact ofchanging income distribution10, showed that wage growth
can generate demand and productivity, thereby creatinga virtuous cycle. Paying workers living wages drives economic growth by increasing their spending power, and asa consequence, increases local demand for goods andservices. It benefits all businesses indirectly while also incentivizing companies to introduce more innovative methods of production so as to safeguard their profits11.

In the 2020 Sustainable Agriculture Standard, knowledge
on living wages for different locations around the worldand how those compare to workers’ prevailing wages isfundamentally strengthened:

There is growing evidence of the business case to adopt responsible business practices on wages. Experience from a
range of companies paying a living wage shows improved
labor relations and social cohesion alongside increased
workforce productivity12. Beyond that, there is the broader
case for companies to comply with legal obligations andconsumer expectations to protect human rights in global
supply chains.

4

1.

A clear definition and living wage benchmarks. The
Global Living Wage Coalition, co-founded by the Rainforest Alliance, developed a standardized definition ofa living wage and a robust methodology to calculate
living wages called the Anker Methodology that wehave integrated into our standard. Using this method, living wage benchmarks for over 21 locations havebeen published and continue to be developed for many
countries around the world15. This is an essential step inorder to understand the gap that needs to be bridged.

2.

Harnessing the power of data. We introduced a Salary Matrix Tool for collecting comprehensive wage
data and analyzing the gap between prevailing wages and living wages for all types of workers on certified
farms16. This new tool will help producers understandtheir actual labor costs and develop an informed andBox 3

Living Wages as a Human Right

According to OECD guidelines19, companies not only
have a responsibility to pay living wages within theirown operations, but they should also promote thepayment of living wages throughout their whole supply
chain, using their leverage to ensure the suppliers theywork with also pay living wages. OECD Guidelines alsoaffirm a country’s obligation to prevent human rights
violations and their duty to enact measures toeffectively protect people from human rights abuses bycorporations.

The Rainforest Alliance promotes a living wage as afundamental human right. The responsibilities of governments and companies to protect human rights are
regulated by international human rights laws and further
explained in the UNGPs and the Organization for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises. The OECD guidelines
are an international multilateral commitment of governments and the most comprehensive set of guidelines forresponsible business conduct to date.

Image: shiftproject.org

5

workable strategy to increase wages together withworkers. Creating transparency around wages allows
all supply chain actors to identify the risks and see
where they can effectively implement responsible
purchasing practices that guarantee the true labor
cost of a product.

sential research on the issue. That’s why we co-founded
the Global Living Wage Coalition in 2013 alongside Fairtrade International, GoodWeave International, and Social
Accountability International in partnership with the International Social and Environmental Accreditation and Labelling (ISEAL) Alliance and international living wage experts, Dr. Richard Anker and Ms. Martha Anker.

Shared responsibility to create better livelihoods forworkers

Over the years, the GLWC has evolved into a strong community to share learnings about applying the concept ofliving wage in sustainability standards and approaches
for implementation. By providing high quality, consistentknowledge about living wage levels and implementation, the Rainforest Alliance seeks to empower stakeholders of all types to collaborate in a non-competitive environment and catalyze global action on living wages. The
GLWC partners with critical stakeholders to spark action
in key, labor-intensive sectors, engage with companies
on their strategies to build sustainable supply chains, andstrengthen the negotiation power of worker organizations
and unions through quality data from the benchmark
studies.

Three new requirements in our Sustainable AgricultureStandard and Supply Chain Standard encourage companies to reward and invest in more sustainable production
and drive more value from the supply chain to workers:
1.

The Sustainability Differential is a mandatory additional cash payment, the amount of which is not
fixed, made to certified producers over and above
the market price of the commodity. The intention isthat this payment recognizes the efforts and specific activities undertaken by the producer to meet
the Farm Requirements of the Sustainable Agriculture Standard. In the context of large farms, it enables farmers who hire workers to pay higher wages. After consulting with a legitimate representativeof their farm workers, large farms will be required tospend the Sustainability Differential on areas that directly benefit workers (i.e. improvements in wages,
health and safety, and working and living conditions).

2.

Sustainability Investments and mandatory cash or
in-kind investments from buyers of Rainforest Alliance
Certified products to certified producers for the specific purpose of helping them meet the Farm Requirements of the Sustainable Agriculture Standard. Thesetypes of investments include those that are requiredfor producers to fulfill core compliance or mandatory improvement criteria in the standard as well as thecost of achieving certification (i.e. implementation of
the Digital Internal Management System and audit
costs). The investments must go towards the needs
identified by producers in their investment plans, andbuyers must report on the investments they make.

3.

Supply Chain Contributions for Living Wage Payment is a self-selected criterion in the Supply Chain
Requirements we developed to support due diligenceon wages and facilitate dialogue across the supply
chain. The criterion builds upon the transparency created by the Salary Matrix Tool on the gap to a living
wage and connects companies to their suppliers who
are willing to work together to implement a plan toachieve living wages over time. In this way, the Rainforest Alliance helps companies put their living wage
strategy into practice while giving them an easy way
to monitor their progress. As more companies use thisrequirement to contribute to achieving living wages,
their aggregate purchasing power should drive sector-wide change.

Tackling the policy framework
Advocacy and policy work is a vital part of the living wage
equation. By addressing the policy framework, we canencourage governments to increase minimum wages
and strengthen social policies. Advocacy is also essential
in discouraging businesses from relocating to low wage
economies and undermining the legitimate efforts of governments to raise the standard of living of their citizens.
That’s why we work together with producers, retailers, andtraders in our Sector Partnership Program to investigate
the implementation of living wages. We look at everythingfrom farm-level productivity and labor costs, all the way up
to the retailer’s price on the shelf. Together with our partners, we are innovating successful tools and approaches
that allow for the costs associated with paying a living
wage to be accommodated within commercial businessmodels. Experience shows us that costs can be absorbed
by increasing efficiencies with a motivated workforce,bonus payments, added value at the consumer level, responsible purchasing practices, and shorter supply chains,among other practices. Dialogue is key as solutions lie incollaboration and contextualization17.
Another way we are tackling the policy framework is bypartnering with the ILO within the framework of the project “Better indicators and Methodologies for Wage Fixing”
to address the issue of minimum wages being set too low.
Unlike GLWC benchmarks, minimum wages are set in a political process that balances competing goals and objectives such as the needs of workers with economic and corporate growth. Tools and indicators that better take into
account the needs of workers are required to strengthen
the capacity of governments, social partners, and tradeunions to set adequate minimum wages. To this end, theproject offers guidance that the ILO will use to assist countries in setting minimum wages.

Bringing key actors together—the Global Living Wage
Coalition

Seeing results, looking at Malawi

Another significant step to achieving living wages is bringing diverse actors together to develop and learn from es-

All of these efforts we have undertaken at the Rainforest Al6

liance together with our partners to achieve living wages insupply chains around the world is starting to show results.
A great example of this is the Malawi Tea 2020 partnership.
This initiative, which was supported by Rainforest Allianceand GLWC research data, led to the first ever collective
bargaining agreement signed between the Tea Association of Malawi and the Plantation and Allied Workers Union(PAWU). This, in turn, has led to increased wages across theentire tea sector in the country. In 2018, the net living wage
gap decreased by 25 percent—meaning tea workers are
now earning 40 percent more than the country’s minimum
wage.

Governments also have a responsibility to protect people
and nature against adverse impacts from irresponsible
business activities. The Rainforest Alliance believes governments should enact legislation or binding regulation torequire companies to undertake mandatory human rights
due diligence. Mandatory due diligence on human rights
has the potential to create a level playing field for companies already addressing living wages in their supply chainsand give laggards a push to do so, promoting a culture ofaccountability and building momentum for collaborationin critical landscapes18.
The Rainforest Alliance urges companies to follow thesteps of due diligence identified in the UN Guiding Principles and the Organization for Economic Co-operation andDevelopment Guidelines by:

In addition to participating in the steering committee ofthe Malawi Tea 2020 Partnership, the Rainforest Alliancealso supports the formation of strong and recognized agricultural labor unions in Malawi. We partnered with Oxfam
to help strengthen the capacity of PAWU so that it can become a strong voice for tea workers and an equal negotiating partner in the collective bargaining process. This resulted in a more balanced and informed renegotiation of
the collective bargaining agreement and increased union
membership at the grassroots level. This project demonstrates how living wages can serve as a rallying point for
all relevant stakeholders—government, local and global
buyers, producers, workers, and unions—to drive sustainable development through responsible business practices.
The way forward•

committing to the payment of a living wage throughout its supply chain in an official living wage policy.

•

conducting due diligence on wages in collaboration with other companies, sector-wide initiatives, standard-setters, workers, and in consultation with trade unions and worker representatives,
identifying where the risk to living wages is biggest(i.e. the countries and supply chains where prevailing wages are still significantly below living wages).

•

remediating cases where living wages aren’t paid.
Addressing the negative impacts of non-paymentof living wages depends on whether the businessis directly responsible, or has contributed to it by,for example, allowing purchasing practices that do
not allow for the payment of a living wage. Remediation must include a review of purchasing practices
to discover the best way to guarantee that the true
costs of labor are paid for in price negotiations andto create transparency on supplier costs and prices.

•using their leverage to make their suppliers change
their behavior and ensure they pay a living wage.

•

encouraging collective bargaining agreements that
respect national minimum wage policies and advocating for governments to increase minimum wage
and social protection mechanisms.

Everyone has a role to play: recommendations for governments and companies
As the Rainforest Alliance, we play a key role by strengthening the requirements of our certification program andthe accompanying toolkit to achieve living wages for agricultural workers. We are providing better data to understand and measure progress towards achieving living
wages, and we are creating mechanisms for companies
to recognize and reward more sustainable production anddirectly support the certified producers they source fromto pay their workers a living wage.
We also work with governments and companies to put inplace effective policies that protect human rights and require employers to pay wages that allow workers to have adecent standard of living.
Governments play a vital role in achieving a higher standard of living across agricultural supply chains. Governments in producing and consuming countries alike are
the main guarantors of human rights and have the duty
to protect and fulfill the right to a living wage by setting up
the necessary laws and regulations to create an enabling
environment. They should stimulate inclusive economic
growth and seek to repair existing inequalities by investing in social capital such as universal access to healthcare,education, social protection, and skill development—working to ensure that those who need it most get access tothese benefits.

7

Notes1
Castaneda, R.A., Doan, D.D.T., Newhouse, D.L., Nguyen, M.C.,
Uematsu, H., & Azevedo, J.P. W.D. 2018. A new profile of the global
poor. World Development, 101: 250-267 at
2
World Bank’s International Poverty Line is currently set
at $1.90 (PPP, 2015). The International poverty line is based on examination of the national poverty lines from some of the poorest
countries in the world, and conversion of the lines to a common
currency by using purchasing power parity (PPP) exchange rates.
The PPP exchange rates are constructed to ensure that the same
quantity of goods and services are priced equivalently acrosscountries.
3“Agricultural workers and their contribution to sustainable agriculture and rural development” / FAO-ILO-IUF. - Geneva:
ILO, 2007 at 40-43.
4Ibid., at 29 and 40.

5
ILO. 2018. Women and Men in the Informal Economy: A
Statistical Picture. Geneva. In developing countries, over 90 percent
of agricultural workers are informal.
6
The Sustainable Development Goals and the Living
Wage/ The Living Wage Foundation at https://www.livingwage.org.
uk/sites/default/files/LW_SDG_Report.pdf
7
ILO Decent Work agenda includes employment creation,social protection, rights at work, and social dialogue, https://www.ilo.
org/global/topics/decent-work/lang--en/index.htm ; ILO Declaration on Social Justice for a Fair Globalization , adopted June 2008
http://ilo.org/wcmsp5/groups/public/---dgreports/---cabinet/documents/genericdocument/wcms_371208.pdf

8Georgiadis, A. Efficiency Wages and the Economic Effectsof the Minimum Wage: Evidence from a Low Wage Labour Market.
Oxford Bulletin of Economics and Statistics’ (2012).
9
https://www.undp.org/content/undp/en/home/sustainable-development-goals/goal-8-decent-work-and-economicgrowth/targets.html
10Wage-led Growth An equitable strategy for economic
recovery, ed.by Marc Lavoie and Engelbert Stockhammer, Palgrave
Macmillan UK (2013), 71-99.

11

Ibid.

12
For the business case on paying a living wage with evidence from multiple employers see the UK Living Wage Foundation
latest report https://www.livingwage.org.uk/good-for-business. For
the general business case of compliance with human rights see
Business and Human Rights: From Principles to Practice, ed. Dorothée Baumann-Pauly, Justine Nolan (Routledge 2016) at 11-22.
13
ILO Convention No. 26 for determining minimum wages(Revised in 1970: Convention No. 131) ; Freedom of association andthe recognition of the right to collective bargaining (87, 98) ; Elimination of all forms of forced or compulsory labor (29, 105) ; Effective
abolition of child labor (138, 182) ; Elimination of discrimination in
respect of employment and occupation (100, 111) ; ILO convention
95: Protection of Wages Convention (1949); ILO Convention 1: Hours
of Work (1919) ; ILO Convention 155: Occupational Safety and HealthConvention (1981).
14This requirement doesn’t apply to small farms that are15

https://www.globallivingwage.org/

16

The Salary Matrix Tool and the related methodology wasmembers of a groupdeveloped as part of the project entitled “Next Steps in Sustain-

ability: Measuring Impact and Assessing Living Wages” sponsoredby IDH’s Sustainable Trade Initiative and other private entities, andexecuted by the Rainforest Alliance from 2016 to 2019.

17
Factors relevant for contextualization are the size of thecompany, the location of its activities, the situation in a particularcountry, the number of business relationships, the sector, and thenature of the products or services involved, among others.
18
The Rainforest Alliance position on due diligence https://www.rainforest-alliance.org/sites/default/files/2019-12/Due-diligence-legislation.pdf
19OECD Guidelines for Multinational Enterprises, 2011, Chapter V, 4B. The OECD Guidelines is inspired by the ILO wording of living
wage as laid down in the ILO Tripartite Declaration of Principles
concerning Multinational Enterprises and Social Policy. The OECD
Guidelines state that: “when multinational enterprises operate
in developing countries, where comparable employers may notexist, (they should) provide the best possible wages, benefits andconditions of work, within the framework of government policies.
These should be related to the economic position of the enterprise
but should be at least adequate to satisfy the basic needs of theworkers and their families.”

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