But few firms have Unilever’s global reach. The consumer goods giant sells more than 400 brands in 190 countries and its products are used by 2.5 billion people.
Unilever said that a living wage should allow workers to break the cycle of poverty. “It allows people to afford a decent standard of living, covering a family’s basic needs: food, water, housing, education, healthcare, transportation, clothing; and includes a provision for unexpected events,” it added.
Countries in Africa and South America, and others which supply Unilever with key commodities, such as India, Malaysia and Indonesia, will be prioritized.
“It is important that this is done with full transparency [and] the living wage and living income targets they set in different parts of the world are independently determined … and not something Unilever in any way sets themselves or influences,” they told CNN Business.
Unilever currently requires its suppliers to pay legal minimum wages. Ingram said it will work with NGOs, suppliers, other businesses and governments in an effort to establish living wages for the countries where it operates.
“The core of what we’re trying to do is make a change that is systemic [and] wide enough that ideally sectors and governments institute living wages as a natural base,” said Ingram.
The cost of a living wage
Asked whether Unilever’s margins would be squeezed by its commitment to a living wage, Ingram said there would be a cost to the company and its suppliers but it would be “absorbed in the value chain,” and in some cases covered by helping suppliers to be more productive.
For example, developing sustainable agriculture systems in poor countries could boost crop yields and increase farmers’ incomes. “We’re not exactly sure what that gap and cost will be but what we are sure of is that the consumer won’t end up paying more,” he added.
But Fairtrade International said that price must be an “integral part of any living wage pledge” to avoid negative impacts on producers and their workforce. “There is a correlation for instance between very low wages in tea estates and consumer prices,” senior adviser on workers’ rights and trade union relations Wilbert Flinterman told CNN Business.
“Fully closing the living wage gap will depend on commitment and collaboration between different actors across the supply chain — from producers to traders and retailers,” he said.