In March 2023, UK retailers committed to closing living wage gaps in international banana supply chains by 2027.
Fairtrade celebrates the work of IDH in bringing together UK retailers to focus on living wages for banana workers, and is supportive of the steps retailers have taken over the past year to collaborate openly with others, sharing challenges and good practices regarding the implementation of living wages for banana workers.
IDH aims to put people, planet, and progress at the heart of markets by leveraging the power of global trade to create better jobs, better incomes, a better environment, and gender equality for all
Through Fairtrade banana sourcing, UK retailers are working with price mechanisms and Fairtrade Premium to progress towards the 2027 commitment. In 2023, the total estimated Fairtrade Premium paid to banana workers earning below a living wage was approximately £567,000 across Sainsbury’s, Waitrose, and Co-op.
What is a Living Wage?
A living wage is a wage that covers the basic needs of workers and their families, including food, clothing, shelter, healthcare, education, transport to work and a little extra for unforeseen circumstances.
Fairtrade has taken concrete actions towards closing the living wage gap for banana workers in recent years, including launching the Fairtrade base wage for banana workers in 2021. The base wage, unique among certification schemes, is set at 70% of the living wage benchmark, and is the minimum that employers are required to pay.
Large-scale producers may themselves be struggling with low profit margins that leave them unable to afford to pay a living wage straight away, and the Fairtrade Standard has explicit requirements that wages should increase over time to reach a living wage to acknowledge this.
Increases should be provided regularly and based on incremental steps and a timeline negotiated between employers and elected worker representatives.
How does buying Fairtrade Bananas support living wages?
Buying Fairtrade bananas means producers receive the Fairtrade Minimum Price, the Fairtrade Premium (which is an extra sum of money to invest) and have improved workplace conditions and protection through the Fairtrade Standards.
All Fairtrade-certified banana plantations must pay their workers a Fairtrade Base Wage of at least 70% of the Living Wage Benchmark. Fairtrade Premium Committees at banana plantations must also distribute up to 30% of Fairtrade Premium to support wages where there is a living wage gap and have the option to distribute a further 20% of Premium if they agree to do so.
In 2023, the total estimated Fairtrade Premium paid to banana workers earning below a living wage was approximately £567,000 across Sainsbury’s, Waitrose, and Co-op, the three retailers in the UK that are committed to selling only Fairtrade bananas.
As well as the Fairtrade Premium being used as cash payments to support wages, producers within the Sainsbury’s, Co-op, and Waitrose supply chain used 48% of Fairtrade Premium for other projects that enable a cost saving to worker households and reduce pressure on wages. Projects included education scholarships, subsidised food, and medical treatment.
Together, Sainsbury’s, Co-op, and Waitrose have generated over £7.3million of Fairtrade Premium for Fairtrade banana workers in 2023, and up to 50% of this Fairtrade Premium can be used to close living wage gaps. All three retailers have been selling Fairtrade bananas for more than 15 years.
What else can be done to support Living Wages for banana workers?
In October 2023, Fairtrade publicly shared Living Wage Reference Prices for bananas.
Fairtrade is the only global standard which calculates a publicly available Living Wage Reference Price to enable the industry to close the gap towards living wages. These reference prices can be used by retailers to understand what they would need to do to meet living wage benchmarks for their banana sourcing.
In February 2024, Sainsbury’s committed to paying the Fairtrade Living Wage Reference Price for all bananas they sell, which are 100% Fairtrade certified.
Best practice is also committing to long term contracts, which means workers and small holder farmers have greater stability, financial security, and means that workers and management can plan for the future.
Sainsbury’s and Co-op have both committed to long term sourcing contracts with their banana supply chain, a change to the industry norm of one-year contracts.
What is Fairtrade’s long-term ambition?
The Fairtrade ambition is to work alongside workers to lock in living wages through fairer prices, collective bargaining agreements, decent work, and long-term contracts so that workers can benefit from improved earnings in a way that is sustainable, long-lasting and which helps them plan for their futures.
Fairtrade also continues to work closely with smallholder banana farmers, who are key to the supply of bananas and to whom retailers remain committed.
Fairtrade believes that a living wage should ultimately be negotiated between workers and employers, and that low wages are inherently unsustainable for the workers that receive them.
Fairtrade works to strengthen worker committees in banana producing countries to build their capacity including in negotiation skills, conflict management and human rights due diligence.
Fairtrade continues to fund publicly available Living Wage benchmarks, setting Fairtrade Minimum Prices, and advocating for the adoption of Living Wage Reference Prices.
What is a Living Wage Reference Price (LWRP)?
The LWRP is the price of a packed box of 18.14 kg fresh bananas set for a specific banana producing country, that if paid for each sold box, would ensure that all workers on a banana plantation earn at least a gross Living Wage, as defined in the benchmark reports published by the independent Anker Research Institute.
We call on more retailers to source Fairtrade bananas and support decent livelihoods for the farmers of the UK’s favourite fruit.