Fairtrade Fortnight 2023 spotlights the urgent threat to the future of the foods we love and the livelihoods of the people who grow them. Our work is for people and the planet.
Bananas are the world’s most popular fruit. With an estimated global export value of US$13.6 billion per year, the banana trade remains the cornerstone of many countries’ economy. For more than 450 million people around the world, bananas and plantains are vital staple crops, particularly in lower-income nations.
With no end in sight to the cost of living crisis, workers require a living wage more than ever before. This highlights the challenges workers face and how Fairtrade supports them during the crisis, as well as the gaps that need to be filled by other players in global trade. On a banana plantation in the Dominican Republic, two men, José and Ramón,* discuss their monthly pay packet, feeling the impact of the cost of living crisis as inflation eats into their wages.
However, their situation is comparatively better as they work on a Fairtrade certified banana plantation. Despite the country experiencing 9 percent inflation in 2022, José and Ramón received over US$600, thanks to the Fairtrade Premium, an extra sum earned by producers who sell under Fairtrade terms. This additional money, roughly equivalent to two months’ wages per year, can be taken as cash by banana workers on Fairtrade plantations, serving as a life-line for those in one of the poorest paid sectors.
“The Fairtrade Premium reduces the pressure on disposable incomes,” explains Wilbert Flinterman, Senior Advisor Workers’ Rights and Trade Union Relations at Fairtrade International. “Fairtrade Standards say banana workers must receive at least 30 percent of the Premium in cash, which can go up to 50 percent if they want. That makes a real difference, especially in places where workers earn quite a bit below the living wage.”
Fairtrade says a living wage means workers earn enough to afford a decent standard of living for their household – including a nutritious diet, clean water, decent housing, education, healthcare and other essentials – plus a little extra for savings and emergencies so they can plan for the future.
Wages fail to keep up with inflation
The post-pandemic global cost of living crisis took everyone by surprise – including us. Data collected by Fairtrade revealed that the cost of growing and exporting bananas has risen significantly since 2021, with fertilisers up by 70 percent, fuel up by 39 percent, and pallets and plastic packaging up by more than 20 percent. Add in the need to increase wages – which account for around half of the costs of a box of bananas – and both workers and producers face an uncertain future.
Rising inflation makes it hard for workers to live off their wages. At the absolute minimum, wages should be keeping pace with inflation – but in many sectors they are not. Maintaining the real value of wages is integral to the living wage requirement in the Fairtrade Hired Labour Standard, because without that we cannot make progress. Compensating workers for inflation should be at the forefront of everybody’s mind when thinking about living wages.
To monitor and potentially lessen the impact of the cost of living crisis for workers, Fairtrade has recently strengthened standard requirements according to which companies must demonstrate that they have adjusted wages to inflation. Flinterman explains, “If we allow the purchasing power of workers to decrease, the gap between their current wages and living wages will increase. Therefore we are quite demanding and expect certified companies to address this as a first step towards living wages.”
Fairtrade Premium gives disposable incomes a boost
A recent Fairtrade report suggests that in Colombia – another major source of Fairtrade bananas – the Premium uplift is worth more than US$88 per worker per month. When you consider the living wage benchmark for Colombia is US$433 per month, that’s a significant contribution. Employee Osnaider Mercado Sandoval Suarez, who works on a Fairtrade certified plantation, told researchers: “As a banana worker, we do not have the economic capacity to pay for certain expenses, and so the Premium makes it easier for us.”
Despite the significant role of the Fairtrade Premium in supplementing wages, Flinterman insists that the need for a living wage for workers is more pressing than ever. “Workers on farms, factories and plantations are among the most vulnerable people in global trade,” he says. “They often lack formal contracts, trade union representation and basic health and safety protection – and that’s before you get to the issue of low wages. Of course the Fairtrade Premium is a major plus for disposable incomes – especially in the banana sector – but it must never be used as an excuse not to pay adequate wages.”
Living wage benchmarks can support collective bargaining
Trade unions in a collective bargaining relationship with Fairtrade plantations can benefit from living wage benchmarks that are adjusted every year to take account of inflation. To start a negotiation process, unions must organise the workers in a company. When the required minimum level of support is reached it triggers a legal obligation for the company to bargain. Fairtrade certification can make this process easier, as certified companies must grant unions access to the worksite, sign a Freedom of Association Protocol and post a Right to Unionise Guarantee in the workplace.
The post-pandemic economic slump has only served to underline the urgent need to introduce living wages across a variety of sectors, and there is some good news: In Ecuador and Colombia wages of banana workers hover around living wage levels. In the Urabá region of Colombia specifically, which hosts the largest cluster of Fairtrade plantations in the country, wages that were achieved through collective bargaining are even better.
Also in Ghana, Fairtrade banana plantations have a constructive relationship with two national trade unions and use living wage benchmarks in their bargaining process. In Ethiopia, the absolute floor wage Fairtrade requires for flower workers was adjusted at the end of 2022 to reflect an increase in the international poverty line. However, with inflation in Ethiopia running at around 35%, that adjustment will quickly start to lose traction.
For people and for the planet
“Many industries – including those producing flowers, tea and textiles – only remain viable through purchasing practices that are built on keeping costs and wages low. Some retailers are turning the heat up on producers to pay living wages, but they also complain that their customers can’t afford to pay any more. It is right that we try to protect workers in global supply chains from exploitative wages and we won’t let up – but eventually, someone has to foot the bill and show they are serious about business and human rights principles. ”
Fairtrade plays a crucial role in safeguarding human rights and sustainability in the global supply chain. We must all bear the responsibility and demonstrate genuine commitment to business, sustainability and human rights principles. This effort is not only for the sake of the workers but also for the well-being of our planet.
* names have been changed