Living wage: key lessons from a decade of progress

Fair Wage & Income, including a living wage, is one of eight salient human rights issues Unilever is working to address. Respect for human rights underpins every aspect of the way our business operates, and earning a living wage is a fundamental part of this.^[a]

In 2020, six years after launching our Framework for Fair Compensation,^[b] we became living wage compliant and in 2021 we were accredited as a global living wage employer by the Fair Wage Network.

Ever since then we have been working to extend this commitment to our supply chain. Here are five key lessons that are shaping our progress.

1. The business case is key

   One of the most powerful ways to tackle inequality and redistribute value in global supply chains is to encourage the widespread adoption of a living wage.

   Research we commissioned shows that a living wage improves worker satisfaction and productivity, reduces turnover and its associated costs and, in some cases, grows consumer markets by helping more people to have the means to buy consumer products, including Unilever’s.^[c]

   “As a company we cannot thrive when societies fail,” says Head of Social Sustainability Anouk Heilen.

   “We need a stable business operating environment. We value and support those who depend on Unilever to make a living, because in return our business success depends on them.”

2. Leading by example

   Credibility and trust are necessary when engaging suppliers on living wage.

   Our experience and continuous investment in maintaining living wage compliance for our own operations mean that we understand the challenges our suppliers can face and share the valuable lessons we have learnt along the way.

   This is why we set a future mandatory requirement in our Responsible Partner Policy, asking our suppliers to pay their employees a living wage by 2030 as we recognise it takes time to achieve.

   ”Unilever is helping us ensure fair living wages across regions while balancing cost pressures and maintaining competitiveness,” says one of our key suppliers, Vinay Agarwal, Managing Director, Creative Group of Industries.

   

3. Success depends on reliable roadmaps

   To get suppliers started on the journey, we ask them to sign our Living Wage Promise, which commits them to assessing the gap between what they currently pay and the living wage, and to take steps to close it.

   Our baseline surveys showed that many suppliers have limited awareness of what a living wage is and struggle with how to get started.

   So, to support them, we launched the Living Wage Supplier Programme in partnership with the Sustainable Trade Initiative (IDH) to provide the tools and resources they need to implement living wages.

   We have already successfully hit some key milestones.

   For example, nearly all factories that currently, or that will soon, work exclusively for Unilever have committed to a clear plan aimed at closing any wage gaps in their contracts.

   In addition, almost all factory workers on the payroll of labour agencies are now paid at least a living wage, and we’re on track to meet our 2024 goal of having 28% of our procurement spend with suppliers who’ve signed the Living Wage Promise.

4. Data: you can only change what you can measure

   One of the key barriers to global progress on living wage has been access to credible and transparent living wage data.

   We wanted to improve transparency by helping to make the data publicly available.

   That is why, in coalition with 11 companies, we’ve invested in the WageIndicator Foundation to make this data freely available in over 170 countries.

   Having access to this data is not only a valuable benchmarking tool for our suppliers but also a way of providing workers with tangible information that can be used to earn a living wage.

   “Unilever’s role as launch partner for WageIndicator’s public living wage data shows they are fully committed to addressing global barriers holding back progress on living wage,” says Paulien Osse, WageIndicator’s co-founder and Global Lead, Living Wages.

   

5. We cannot do this alone

   Real change depends on global action.

   “We need a mass movement,” says Anouk. “We need more companies making bold commitments. We need governments to review their wage policies. And investors demanding this as part of their responsible investment practices.”

   Levelling the playing field is critical to making progress, which is why we are working with multi-stakeholder platforms including the United Nations Global Impact, The World Business Council for Sustainable Development and AIM-Progress to drive this forward.

   Just this year, we have seen significant advances clearly demonstrating momentum:

   • The International Labour Organization (ILO) global agreement on living wage has had a ripple effect on government legislation – for example in India where we’re working alongside ILO India to support their commitment to replace minimum wage with living wage by 2025.
   • The EU Corporate Sustainability Due Diligence Directive includes a living wage requirement which means companies working in the EU now have to report on it.
   • Over 700 companies have publicly committed to living wage through the UN Global Compact’s Forward Faster initiative.^[d] We raised awareness and called on more companies to join the initiative in 13 markets through multi-stakeholder roundtables in partnership with UNGC and Women Political Leaders, the global network of women politicians.

Looking ahead

We will continue to expand our supplier programme, with an aim to increase the number of suppliers who sign our Promise to represent 50% of our procurement spend by 2026.

To further accelerate private sector commitment and government action, we are working with partners to push for global recognition of the importance of living wages and, alongside others, will leverage key moments like next year’s Second World Summit for Social Development to highlight its relevance in achieving the Sustainable Development Goals.