Living wages in the banana sector

The working group’s actions are primarily guided by four strategic goals that traverse the jointly agreed road map.

The German Retailers Working Group is committed to ensuring that all workers will be paid living wages for their own-brand bananas in the long term. Therefore, the project aims to holistically promote living wages and fair working conditions in the banana sector. All stakeholders in the banana supply chain should be involved in this: from producers, through exporters and buyers, to citizens in the consumer countries. In order to achieve these four strategic goals, the working group has agreed a common road map that includes the following implementation milestones:

• Introduction and rollout of bananas on the German market for which living wages have been paid - Retailers are in ongoing dialogue with producers, suppliers and exporters, as well as with civil society and employee representation partners, to define the exact meaning of a Living Wage Banana.
• Implementation of structural measures to promote living wages and fair working conditions - German retailers would like to support the improved positioning of the concepts of decent work, according to the criteria of the International Labour Organisation (ILO), and of living wages and incomes. To this end, they encourage employee representation, establish dialogue structures between the relevant stakeholders and use communication measures to raise consumer awareness of the sustainable production of agricultural raw materials.

More detailed information about goals, milestones and planned activities is available in the project road map (English | Spanish).

The working group’s overarching goal is to only sell own-brand bananas in the long term, for whose production living wages are paid. The criteria for such a Living Wage Banana are being developed and discussed with suppliers and producers in regular dialogue formats. The working group therefore adopts a “shared responsibility, shared reward, shared risk” approach.

Basically, a Living Wage Banana can either come from a farm that has received a bonus from the retailers to reduce or close wage gaps to achieve a living wage. Or it may come from a business that has been audited to verify that living wages are already being paid to all banana workers. The working group follows the Anker Methodology to estimate living wage benchmarks that are internationally comparable and locally specific. The Anker Methodology is widely accepted by the international community and has been endorsed by the Global Living Wage Coalition (GLWC). 

Producers should be given assistance in order to achieve living wages for banana workers and promote humane working conditions: however, businesses with a wage gap should not be excluded from retailers’ procurement portfolios. Instead, retailers are committed to helping producers that are already endeavouring to close the gap by paying them a so-called living wage differential.

Businesses without a wage gap should be encouraged to improve the transparency of wage and working standards and use this information in price negotiations with buyers. This should allow banana producers to maintain high wage and working standards in the long term, even during times of instability. 

In addition, working group members want to discuss other sustainable, responsible procurement practices and include these in the pilot. 

The German Retailers Working Group would like to find suitable approaches to close any wage gaps on the farms that supply its members. For this purpose, the working group collaborates with the certification bodies Rainforest Alliance, Fairtrade and others. Ecuador was the first partner country to test approaches for the nationwide implementation of living wages. The South American country is one of the main exporters of bananas for the European market. In addition, Ecuador already has experience of living wages, as the concept of a so-called “Salario Digno” is embedded in its legal system. Ecuador therefore acts as a blueprint for other banana-growing countries such as Costa Rica and Colombia, where the project will be rolled out from summer 2023.

As one of the first steps towards establishing living incomes in the banana supply chain, the working group defined the analysis of wage gaps. An important milestone was achieved at the end of 2022: the analysis of wage gaps at the Ecuadorian farms supplying working group members. Participating producers reported narrow wage gaps of less than 1 per cent of workers. When a wage gap was identified, it averaged 9.62%, with a slightly higher average for men (9.81%) than for women (8.31%). 
In addition to the wage gap results, an important finding of the analysis is that more transparency and on-site verification of self-reported wage data by interviewing workers and reviewing documents are crucial to ensure valid results. 

The data nontheless shows that Ecuador is leading the way when it comes to paying living wages in the banana sector. The working group will develop suitable approaches for on-site verification till the end of the project taking into account national solutions.
For the working group’s first project, Ecuador acts as an important blueprint for transferring best practice to other countries that produce the retailers’ banana ranges. In addition, wage data collection will be coordinated with other living wage initiatives in the banana sector at a European level from 2023. A jointly developed schedule for collecting and reviewing data will make the current process more efficient and reduce the burden on producers, by avoiding duplicate requests, among other things. This schedule is currently being implemented for the first time. 

In order to collect wage data at the farms that supply its members, the German Retailers Working Group decided to use the digital IDH salary matrix. This is a practical tool that enables producers to assess how their employees’ total remuneration (including wages, bonuses, financial allowances and benefits-in-kind) compares with the relevant living wages benchmarks in their region. The tool supports the supply chain’s efforts towards wage transparency and shared responsibility for eliminating living wage differences. 

The working group uses this tool because the consistent, coordinated analysis of the living wage gap is crucial for the success and credibility of strategies to close gaps and achieve a reasonable standard of living for workers.

The GIZ Living Wage Costing Tool, which offers various simulations and scenarios for closing wage gaps, including the corresponding cost implications, is used to close wage gaps. Producers in particular use this tool to determine additional costs for paying living wages, thereby strengthening their negotiating position. SASI provides appropriate training for producers.

In order to establish living wages in the long term, further support measures are needed for producers in the form of sustainable, responsible procurement practices. The working group is implementing pilot actions in collaboration with its supply chain partners.

In order to gain a better understanding of the situation of workers on the Ecuadorian farms that supply its members, the working group commissioned a study: workers on around 80 farms were asked about their employment situation. The anonymous results were summarised in a report and used to further develop the project. The group strictly adheres to the principles for core labour standards of the International Labour Organisation (ILO).

A key finding of the report is the importance of employee representation for the enforcement of decent working conditions and living wages. The situation of trade unions in Ecuador is extremely critical. Unionised workers often face discrimination and employee representatives are prevented from doing their work. The retailers therefore support the non-governmental organisation Banana Link in its work with the Ecuadorian trade union SINUTRABE that trains managers on issues such as decent work and living wages in order to improve their communication and negotiating skills. They also intend to help SINUTRABE improve its communication in order to encourage more workers to join. Since 2024, similar activities have been implemented in Costa Rica and Colombia, the results of which will be presented at the end of the same year. 

What differentiates the approach taken by the German Retailers Working Group from those of others is the close involvement of and support for suppliers and producers during every implementation stage, emphasising its participative strategy. As an important platform, the World Banana Forum has been offering two subgroups on "Methods" and "Markets" since 2024, in which the topics of Decent Work and Living Wages are discussed with all relevant banana stakeholders and solutions are jointly developed. Stakeholders are also involved in project development through regular joint workshops. 

In order to share learnings, coordinate the approaches of European initiatives on living wages in the banana sector and promote pre-competitive cooperation, the German Retailers Working Group is part of the “Better Together: Retail Collaboration to Advance Living Wages in the Banana Sector” series of events. Coordinated by GIZ and IDH – The Sustainable Trade Initiative, this series brings UK and EU retailers together to discuss common needs, contemplate joint solutions and share experience and best practice. The aim is to improve efficiencies, simplify processes for supply chain partners and share learnings. To this end, the events focus on key issues that have been identified as crucial for further collective efforts towards living wages. Participants include retailers from Belgium, Germany, the UK and the Netherlands. The meetings’ initial outcomes include an agreement on coordinated wage data collection and the publication of a Belgian voluntary commitment.  Further meetings will also involve stakeholders in the supply chain, such as suppliers and producers.  Meetings will continue to be held every six months under the leadership of IDH and GIZ.