The challenge

Unilever is one of the world's leading suppliers of food, home care, personal care and refreshment products, with over 400 brands and sales in over 190 countries reaching 3,4 billion consumers a day. Over half of the company's footprint is in developing and emerging markets. 

Unilever has a long and proud history of driving social change and acts across all aspects of The Good Work Alliance’s Framework. One of the most impactful actions they have taken is on living wages. In 2014, Unilever launched its Framework for Fair Compensation with a commitment for it’s own workforce to earn at least a living wage meaning enough to afford a decent standard of living including food, water, housing, education, healthcare, transportation, clothing and other essential needs including provision for unexpected events. They’ve achieved this since 2020. In 2021, as part of Unilever’s commitment to raising living standards in the company’s value chain, Unilever stepped up its living wage ambitions to ensure everyone who directly provides goods and services to the company will earn at least a living wage or living income by 2030. 

Following some tumultuous years in which war has returned to Europe and triggered a domino effect on food and energy prices around the world, the business case for investing in living wages has never felt more relevant. Below are some of the biggest barriers to success for organizations looking to make living wages a reality in their value chains.

Demonstrating the Business Imperative

• Businesses often perceive living wages as just a cost, adding to the challenges of pursuing and implementing living wage practices.

Accessible, transparent, and credible data

• Lack of free, accessible data as much of the data is behind a paywall and not all benchmarks have global coverage.
• Lack of alignment on minimum requirements of a living wage.
• Lack of transparency in the methodology used, making it difficult to compare benchmarks and impacting the credibility of the data.

Accelerated adoption of commitments

• Over the last years, momentum has been growing. Rankings and ratings such as World Benchmark Alliance and the Dow Jones Sustainability Index are increasingly demanding corporate disclosure on living wage. Yet, only 4% of companies have a commitment to pay a living wage. 

The action taken

Unilever recognizes the scale of the challenge, as it requires an immense shift in the way that business is done, hence they set their 2030 target to ensure a step-by-step approach is taken as it cannot be achieved overnight. To achieve the company’s commitment, a phased roadmap is being implemented, starting with what is closest to Unilever’s own operations such as collaborative manufacturing (CM) and contingent workforce, and then working on its way outwards.

Unilever has also started with local baseline assessments and activation in priority markets where the gap between legal minimum wage and living wage is the biggest, the social safety net is the weakest, and Unilever has leverage through its spend.

To demonstrate the business imperative, Unilever commissioned a report with Business Fights Poverty, Shift and University of Cambridge showcasing the business benefits for taking action on living wage. The report found that there are clear commercial benefits including better risk management, securing long term consistent supply of raw materials, productivity gains, attracting and retaining talent, maintaining reputation, and growing consumer markets. A Canadian study found that a 1 percent increase in minimum wages translates into a 0.5 percent increase in real retail sales.

To address the challenge of accessible, transparent, and credible data, Unilever is working closely with other companies and organizations to support the public release of living wage data for countries across the world. The data would reflect, as closely as possible, the amount needed to afford a decent standard of living in a certain region within a country. Furthermore, Unilever is advocating for the creation of a reference framework by an independent, credible organization to ensure the methodologies used by benchmarks are aligned and that the data is given global legitimacy and credibility.

Learn more about Unilever’s approach on their website. And if you’re a Unilever partner and feel inspired to join Unilever in its journey to a living wage, sign their Living Wage Partner Promise. 

To support organizations in applying good work practices, Unilever has partnered to create tools and solutions which will enable a step-by-step approach and help simplify implementation such as:

• IDH: Business Roadmap on living wages and the salary-matrix tool to calculate living wage gaps.
• Aim Progress: Living Wage Playbook defining the ‘how-to’ on implementation.
• UNGC: Self-assessment tool (launching in 2023)

In 2023, Unilever is launching an impact study which will shed light on the impact on workers, employers and the economy of paying a living wage.

The learnings

Unilever understands that this commitment cannot be achieved alone and all stakeholders must play a role to create systemic change.

Unilever recognizes that creating systemic change towards ethical and sustainable practices requires the participation of all stakeholders. That is why Unilever are coordinating a robust advocacy program including business, government, investors and NGO’s, aimed at:

•Leveraging global moments like WEF and UNGA to raise awareness and urgency and bring others onboard.

•Advancing living wage as a priority in key multi-stakeholder and business coalitions, for example by endorsing the UN Global Compact’s Call to Action on Living Wage, calling on UNGC’s 16000 members to start closing the gap in their own operations and supply chains.

•Supporting EU legislation on Corporate Sustainability Due Diligence through a joint, private sector letter to the EU.

•Bringing living wage up business and political agendas in key, local markets.

Governments have a crucial role to play to level the playing field and incentivize private sector action on wages by ensuring minimum wages are set to at least a living wage.

It is time to rewrite the narrative: living wages are not a cost to businesses, they are a measurable and tangible contributor to business success.” - Reginaldo Ecclissato, Unilever's Chief Supply Chain and Business Operations Officer

The outcome

These efforts have led to nearly 20% of Unilever’s top 450 strategic suppliers to sign the Living Wage Partner Promise so far, effectively joining Unilever in its commitment to pay workers a living wage.