- Unilever has committed to ensuring that workers who directly supply its goods and services receive a living wage by 2030. While Unilever is still working out the exact pay rate that equates to a living wage in the 190 countries in which it operates, the company did say wages need to be sufficient to cover food, water, housing, education, healthcare, transport and clothing, and also include a provision for unexpected events. Unilever said it already pays its own employees a living wage, at minimum.
- The company currently requires its suppliers to pay legal minimum wages. However, this new initiative will significantly boost the paychecks of the millions of employees working for the multinational company’s 65,000 direct suppliers, which includes several thousand agricultural businesses, per CNN Business. Unilever's chief human resources officer Leena Nair told the BBC that suppliers unwilling to participate in this initiative may lose their contracts with the firm.
- Unilever CEO Alan Jope said the initiative is targeted to address social inequality. "The past year has undoubtedly widened the social divide, and decisive and collective action is needed to build a society that helps to improve livelihoods, embraces diversity, nurtures talent, and offers opportunities for everyone," he said in a statement. The move also offers Unilever another value proposition to appeal to consumers who are continually demanding more sustainability and equitable practices from manufacturers. It can also polish the company's reputation among potential employees.
Traditionally, food manufacturing has been a well-paying, desirable job, particularly in the United States. However, by the last decade, food manufacturing began to pay less than other manufacturing jobs, according to U.S. Bureau of Labor Statistics. The BBC noted that Unilever is one of the first big corporations to expressly make such a commitment to a living wage for all its suppliers worldwide. It reported that the move would result in pay for workers that is twice the minimum wage in some countries.
Many of the countries that will benefit most are the same ones that have historically been plagued by concerns surrounding operational standards and fair wages. And often the living wages are much larger than the country's official minimum wage. For example, in rural areas of Côte d’Ivoire, where Unilever sources cocoa for its Magnum ice cream brand, the living wage was 68% higher than the national minimum wage in 2020, according to data from Global Living Wage Coalition cited by CNN Business.
Unilever's Ben & Jerry's ice cream brand said it was paying a livable wage of $18.13 per hour in 2020, which was more than double the U.S. federal minimum wage of $7.25 per hour.
Although the benefits of a living wage are attractive to workers, it will inevitably eat into Unilever’s margins. In its most recent earnings release, the company reported that its food and refreshment division saw underlying sales growth of 3.7% globally for third-quarter 2020, although the closure of foodservice channels during the pandemic has pressured its performance.
Unilever told CNN Business that the increases in wages will be "absorbed in the value chain," and that augmenting pay has ancillary benefits that can outweigh the cost. In many cases, increasing wages can also lead to more productive suppliers by encouraging the retention of qualified employees, something that has proven difficult in recent years.
While this commitment from Unilever is significant, it is not the only company that is reconsidering compensation in its ranks. Last spring, Coca-Cola said it planned to better align pay across all levels by considering the wages for all of its employees when setting executive salaries.
Other companies have also reconsidered the wages they pay employees as food processing jobs have become more difficult to fill. Labor shortages in the U.S. propelled Tyson Foods to raise wages for poultry workers in 2017. Between 2017 and 2018, wages for food processing workers rose 23.58%, according to Finder.com.
By rolling out this policy worldwide to all its suppliers, Unilever is bound to attract the attention of the 2.5 billion consumers who use its 400 brands. Meanwhile, as supplementary benefits continue to erode in the manufacturing industry, wages are becoming ever more important to recruitment. By raising them over the next decade, Unilever is sure to establish its reputation among current, potential and future employees.