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Unilever’s approach

Unilever’s vision is for the people who grow, make and sell our products to have a decent livelihood, which includes earning a living wage. This means they can afford the essentials of daily life for themselves and their families, through work that is secure, dignified and fair.

We can realise this vision only with support and collaboration from our suppliers. 

Read more on this:

This page shares tools & support information on living wage with our partners:

Living Wage Benchmarks Data: Please check WageIndicator Foundation. Unilever is supporting WageIndicator Foundation to make this data (covering 165 countries) freely available.

Living Wage Playbook: The playbook touches upon key topics under living wage, describes a living wage journey and provides pointers to a number of resources. 

Frequently Asked Questions: A compilation of most common questions on living wage.  

Living Wage Expert Guidance: Suppliers can reach IDH’s living wage experts for clarifying any specific questions. The email support is available in English is accessible for a 6 month period starting 29th May 2024.

Living Wage Expert Clinics: A monthly pre-scheduled call with IDH living wage experts. Our partners can join the calls to discuss their living wage questions in English.  

Partner Event Recordings: Our 2024 living wage partner events, hosted by Willem Uijen, Chief Procurement Officer, Unilever. 

Country Resource Pages: These are additional resource pages providing translated content in local languages, for countries key to our programme.  The translations will help make the resources more accessible to our partners and their teams based in these markets.  The content includes the playbook and a recording of the country market event, and is available for:  Brazil, China, Indonesia, Mexico and Thailand.

Living Wage Playbook

Frequently Asked Questions

This section explains the importance of living wage, benefits to companies and workers, and the connection of living wage with human rights and SDGs.   

There are many benefits for a company to close living wage gaps. Among these benefits, the first worth mentioning is reduced worker turnover and increased workers’ productivity, which lowers business costs. Also, it improves a company's reputation among customers and increases its recognition as a reputable employer in the market. It supports the company in achieving regulatory reporting and Sustainable Development Goals, especially the ones focusing on human rights (1,2,3,4,6,7,8,11). Overall, it can also help to incentivise interest in the sector, avoid consumer boycott and stabilise supply chain actors and relationships.

“A Living Wage means the difference between mere subsistence and the ability to meet basic needs and have a modest amount left over to enhance well-being and physical and mental health. A Living Wage can free people from personal debt, help to pay for the education of their children or to save for their own security in later life” (WageIndicator, link). When receiving a living wage, workers earn sufficient wages for them and their family to afford a basic but decent life.

Paying a living wage is not a legal requirement. However, ensuring payment of a living wage is part of the business responsibility to respect fundamental human rights. Businesses can further align with the UN Guiding Principles on Business and Human Rights and the Sustainable Development Goals (SDGs) is by identifying what are the risks and challenges linked to low pay for workers and actively working on closing living wage gaps. Unilever is asking suppliers to take action on living wage by measuring the gap, creating plans to address the gap, and tracking progress against the plans.   Our suppliers can collaborate with us on this, by signing the living wage Promise.  

The Universal Declaration of Human Rights states that “Everyone who works has the right to just and favourable remuneration ensuring for (one) self and (one’s) family an existence worthy of human dignity.” This provision of an adequate living wage is repeated as one of the conditions for universal and lasting peace by the International Labour Organization (ILO). Living wage has a direct impact on human rights such as the right to just conditions of work, the right to have adequate standard of living, the right to rest and leisure including reasonable working hours, have the right of protection of the family, the right of protection of the child and the right to health.

In 2015, the United Nations proclaimed 17 Sustainable Development Goals (SDGs) that are to be achieved by 2030. The concept of living wage is crucial to 8 out of 17 the SDGs. It directly impacts 5 SDGs (SDG 8: Decent Work and Economic Growth, SDG 1: No Poverty, SDG 3: Good Health and Well-Being, SDG 5: Gender Equality, SDG 10: Reduced Inequality, SDG 16: Peace, Justice and Strong Institutions). It also indirectly impacts other SDGs. You can read more on the link between the SDGs and living wage here.

This section explains the key concepts which form the building blocks of living wage.  It explains what the benchmarks are, how they are calculated, and how can companies compute their living wage gaps

The Global Living Wage Coalition has defined living wage as the “remuneration received for a standard workweek* by a worker in a particular place is sufficient to afford a decent standard of living for the worker and her or his family”.

Elements of a decent standard of living include adequate food, water, housing, education, healthcare, transportation, and other essential needs, including provisions for unexpected events.

*Legal regular working hours or 48 hours per week, whichever is lower.

A minimum wage is required by law and determined by the Government balancing the aims to reduce poverty and promote economic growth. Minimum wage is not adjusted for inflation and is calculated at the country level or might differ by occupation, sector, region, and/or city.

A living wage is a voluntary reference point for the remuneration needed to afford a basic but decent quality of life. This estimate is a needs-based calculation of the cost of living for a typical family in a specific region and year. It takes into consideration the number of workers in a typical family as well as typical taxes and deductions.

A living wage is the remuneration received for a standard workweek by a worker in a particular place sufficient to afford a decent standard of living for the worker and her or his family.

A living income is the net annual income required for a household in a particular place to afford a decent standard of living for all members of that household.

The concept of living wage applies to hired workers (e.g., in factories, plantations or stores) or merchandisers who sell products. A living income is applied in the context of any income earner, such as self-employed farmers.

Living Wage Benchmarks are a calculation of the wage that is necessary to afford a basic and decent standard of living for a particular area. The conceptual definition of living wage has been translated into a practical methodology by a handful of research and measurement organizations. Through these methodologies, these trusted organizations develop and publish living wage benchmarks. These organizations can also provide such independent and credible benchmarks, as well as background and contextual information.

Benchmarks are not inherently sector specific and the living wage applies to everyone living in that area or region. However, certain areas are highly dominated by the presence of one or two sectors which makes the living wage particularly relevant for that sector.

Benchmarks are developed by a variety of independent researchers, unions, and organisation, in consultation and participation with local stakeholders. Each organization and Living Wage Benchmark Methodology has their own approach for calculating the Living Wage, following the common definition. To understand whether a living wage methodology is robust, IDH has developed a process to recognize credible living wage benchmark methodologies available in the market. IDH acknowledges there are many methodologies available to calculate living wage benchmarks and the recognition process is open to all methodologies to apply. Information about all recognised living wage benchmarks, including the regions that they cover, can be found on the IDH website.

Each organisation and Living Wage Benchmark Methodology has their own approach for calculating the Living Wage although they use the same common definition. For instance, a common difference is how each methodology gathers the necessary data. Additionally, each methodology may consider different items ‘basic but decent’ in the cost of living. Moreover, the geographical scope can differ (e.g., some methodologies provide benchmarks at the country level while others provide benchmarks at the regional or sub-regional level). Some  methodologies are publicly available online while others are for purchase.

The following links explain the core elements of the approach of each Living Wage Benchmarking Methodology,

The living wage is calculated by first establishing the cost for the basic but decent life in a specific region, inclusive of food, housing, education, healthcare, transportation, clothing, and other essential needs for a family including unexpected events. The exact costs reflect local items and prices.

The total costs for a family are then divided by the typical number of working adults to reflect other wage earners' contribution to the family earnings.

This value indicates the necessary take home pay for one wage earner, or the net living wage, in a specific region for a single month.

Finally, this net living wage is adjusted to consider taxes and deductions. Living wage estimates are often expressed in both local currency and US Dollars.

Example:

See illustration of the calculation of a living wage for a typical sized family in a given region

Step 1. Calculation of the basic costs for the typical sized family in the region

Step 2. Divide the basic costs by the number of wage earners in the family and add taxes and deductions

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The living wage calculation considers inflation in the calculation as each benchmark is specific to a calendar year. Living wage benchmarks are updated from a prior year either by collecting data afresh on an annual basis, or by adjusting for inflation.

Depending on the structure of a workforce, there may be seasonal workers, temporary workers, workers hired via a third party or a subcontractor. All workers working in a facility or location are recommended to be included. The nature of the working contract (e.g., permanent, seasonal, temporary), the contract holder (whether it is a company, a subcontractor or a temporary work agency) and the number of contracts (one single contract, several consecutive contracts, indefinite contracts) shall not be a justification to exclude workers of this comparison. All people working in the organisation should be included disregarding the nature of the relationship, also informal workers.

Part-time and temporary workers have the right to earn a living wage. To ensure that part-time and temporary workers are earning a living wage, one can calculate the monthly remuneration that a part-time or seasonal/temporary worker would make if they were to work full time by prorating their remuneration to 48 hours per week, or whatever threshold the local legislation stipulates as the regular work schedule. For example, someone working 24 hours a week earning $100, would be earning $200 in 48 hours.

Workers who are paid using piece-rate have the right to earn a living wage. To calculate their full-time equivalent wage, use the total remuneration received during one complete year and the total hours worked during that year, per worker, to calculate the monthly remuneration to be compared with the living wage benchmark.

Thus, in tools such as the Salary Matrix, it does not require complex calculations to estimate yearly salaries from diverse remuneration rates but, instead, to simply take the salaries paid and the hours worked throughout the year for each worker (or the average for the job category), as obtained from the payroll system or records.

On the other hand, if piece rate workers usually work less than the legal regular working hours, the total yearly legal regular working hours shall be used in the calculations instead of the actually worked hours.

For further information about piece-rate workers, please visit the Salary Matrix E-learning website.

The amount deducted from gross salaries for taxes and statutory deductions are already included in the living wage benchmark. Therefore, the gross (pre-tax) current remuneration of your workers should be compared against the benchmark. 

The living wage gap is the difference between the living wage estimate for that region and the comparable current remuneration of a worker for that time. The living wage estimate for that region is the gross value that a worker should be earning to have a decent standard of living for them and their family. The comparable current monthly remuneration of a worker includes their wage, the bonuses, and in-kind benefits (for more details, refer to questions 19 and 20).

To calculate the living wage gap, we measure the difference between the living wage benchmark estimate and the comparable current remuneration of the workers.

Living wage benchmark – Comparable current remuneration = Living wage gap

Based on the Anker Methodology, the comparable current remuneration of workers consists of the following three components:

  • Wage
    A pre-agreed monetary value earned by a worker during a standard workweek (excluding overtime)
  • Bonuses
    All monetary bonuses where both the value and payment regularity are agreed upon in advance.
  • In-kind benefits
    Must be accepted by the workers as being valuable, directly reduce the cost of living for a worker, be provided during regular working hours, be regularly provided and agreed upon in advance, and not be mandatory by law;
  • Measured based on the cost to the employer for providing;
  • Includes food, housing, transportation, children’s education, childcare, healthcare.
  • The total of in-kind benefits cannot be above 30% of the total remuneration, out of which each in-kind benefits has a stipulated threshold (food 10%, housing 15%, transportation 10%, children’s education 10%, childcare 10%, healthcare 10%).

Workers' remuneration is expressed in gross values, which means taxes and deductions are not considered. Wages, bonuses, and in-kind-benefits must be agreed in advance between workers and employers.

Note: Tools such as the Salary Matrix automatically caps the threshold of each in-kind-benefits in their calculations.

Example:

Wage: $ 150

Bonuses: $ 60

In-kind benefits: $ 50

Total remuneration = $ 150 + $ 60 + $ 50 = $ 260

Based on the Anker Methodology, for a bonus to be eligible, it must be a regularly provided bonus. The bonus must be expected by the workers at the start of their employment, and not be at the discretion of the employer. The worker must know in advance the amount of the bonus they are entitled to. The bonus must be paid in cash currency (as opposed to vouchers). Below is a list of examples of bonuses that qualify and those which do not qualify to be considered for living wage calculations.

  • Example of qualifying bonus that does not change: Workers in Job Category A receive a year-end bonus every year. The bonus is always 10% of the workers annual wages. Moreover, in some countries it is a legal requirement that employers pay workers one, two or even three months of additional salary, beyond the 12 calendar months. These additional months are considered fixed bonuses in those countries can be included in living wage calculations.
  • Example of partially qualifying bonus: Workers are given productivity bonuses that vary depending on available resources but are guaranteed to be no less than 5% of wages when productivity targets are met. Productivity targets are met every year but were exceeded this year. In this case, the qualifying bonus is 5% only.
  • Example of qualifying bonus that does change: Production, quality and attendance bonuses can vary from day to day. However, the rates and the conditions of the bonuses do not vary and are understood by workers ahead of time.
  • Example of a non-qualifying bonus (legal requirement): Severance package as required by law.
  • Example of a non-qualifying bonus: At the end of last year, the facility decided to give all workers a surprise bonus equal to 10% of their wages.

For further information about bonuses, please visit the Salary Matrix E-learning website.

Note: These are the principles guiding the Salary Matrix and are drawn from the Anker Methodology.

Based on the Anker Methodology, only certain in-kind benefits are counted toward a living wage. To be eligible, these benefits must:

  • be available to all workers in the job category,
  • be accepted and valued by workers,
  • meet safety and quality standards,
  • be additional to what is freely available through public systems,
  • meet the criteria to be eligible (see list below) and
  • cover a basic cost of living as identified in the living wage benchmark.

Eligible in-kind benefits include:

  • Children’s education: These are benefits that reduce workers costs for children’s primary education, such as tuition or school supplies.
  • Childcare: These are benefits that reduce workers' childcare costs, such as free childcare or stipends for childcare services.
  • Food: These benefits include free or subsidized meals regularly taken by workers. Food benefits do not include snacks or on-site cafeterias where workers need to purchase their own food.
  • Transportation: These benefits replace or reduce the transportation costs that workers would otherwise pay for themselves. For example, transportation costs could include free transportation to work, free transportation for all needs in the town of residence, and transportation passes or stipends.
  • Healthcare: These benefits reduce the cost to workers for their and/or their families’ healthcare needs. Examples of qualifying healthcare benefits include free medical services that are not otherwise freely available through public systems, or stipends to cover the portion of workers’ costs to access public healthcare systems. Qualifying healthcare benefits do not include provision of poorly managed clinics, or clinics that are only available for occupational health or first aid services; or the employer’s portion of legally mandated national health insurance. Healthcare costs are not counted if the country provides for free the same healthcare services which are widely regarded as decent in terms of quality and availability.
  • Housing: Housing benefits are only counted if:
  • the housing that is provided allows for workers to live with their families;
  • the housing is for one family only (dormitory-style housing would not count toward a living wage); and
  • The housing meets quality requirements detailed in the living wage benchmark or (when a benchmark does not specify) meets other international housing standards such as those detailed in applicable sustainability standards.

Based on the principles for in-kind benefits outlined in the Anker Methodology, the contribution of in-kind benefits is limited to a maximum amount to ensure the worker's right to self-determination. The combined total value of in-kind benefits is capped at 30% of total remuneration. Housing is capped at 15% of total remuneration. All other benefits are capped at 10% of total remuneration. Tools like the Salary Matrix can help an organisation easily calculate these various benefits and capped amounts.

For further information about in-kind-benefits, please visit the Salary Matrix E-learning website.

Note: These are the principles guiding the Salary Matrix and are based on the Anker Methodology.

This section explains the steps for companies to take action on living wage & best practices 

  • Determine your scope
  • Calculate your living wage gaps 
  • Set clear goals 
  • Implement your action plan to close gaps

As best practices, we also strongly recommend that you engage with your supply chain actors as achieving living wage requires collaboration among all supply chain actors. It is also crucial to analyse the direct cost implications to pay a living wage to your workers. Finally, sharing your learnings and experiences helps to improve transparency and communicating about your goals of paying a living wage for your workers. 

For more information regarding each step, we recommend you visit the Living Wage Playbook.

To support companies to close living wage gaps, IDH has developed the Living Wage Action Guide. This tool supports in understanding how collaboration among supply chain can help overcome barriers in closing living wage gaps in global supply chains.

Through its broad network of partnerships, IDH has developed case studies from which companies can learn. To know more about the case studies, visit this page.

This section covers additional questions that were asked during engagements with partners through different channels - Events, Collaborations, Expert Guidance, etc.

There can be many challenges in implementation. Some of the key ones are listed below:

a.         Difficulty in understanding the steps to be taken

b.         Identifying and accessing the living wage benchmarks

c.         Identifying the right partners who can support

d.         Addressing the additional cost from paying workers more

e.         Engaging workers & communicating internally/ externally

Governments have a role to play, as minimum wages are regulated. The governments can help create a level playing field through raising the minimum wage to meet or be closer to the living wage. E.g. India aims to replace minimum wage with living wage by 2025.

WageIndicator data access currently works after providing a valid email address and a phone number.  The website uses the email address to send a ‘verification code’ for accessing the data.  For any challenges, please contact the WageIndicator support team directly.

Living wage benchmark calculation uses a number of parameters that are specific to a country or location. As detailed previously, the process includes collecting data on the cost of living for an average sized family in that place; the cost is then adjusted by the average number of income earners in a family; and finally there is an adjustment for statutory benefits and taxation. As the cost of housing, food, transportation, education, etc. can be different for different regions within a country, the living wage benchmark will also be different.  Similar to the cost, other parameters of average family size, number of income earners, taxes and statutory deductions will differ by country. Hence, the benchmarks can have a very wide range of difference for different locations/ countries. Please refer WageIndicator benchmarks data which are available for each state in India for a specific answer.

Unilever’s current initiative is to encourage partners to take steps towards a living wage for workers in their own operations. 

No. The Living Wage Partner Promise is a document that any of our partners can sign even when they haven’t achieved a living wage for their workers.   By signing the promise, our partners declare their intention to work towards a living wage for workers by – calculating the gap for their workforce, making plans to address the same, and share their progress & learnings.

Some questions related to Unilever plans, Living Wage Partner Promise, and financial impact to suppliers, are answered by speakers in the Q&A segment.  

Some other questions are already included in the FAQs.  We will further add newer questions here that might be relevant for a larger audience.

For any specific technical living wage question, we encourage you to use the Living Wage Expert Guidance. 

For any Unilever related question, please reach out to your Procurement contact, or reach us over email including your name, designation and organization name on Social.Sustainability@unilever.com.

Living Wage Expert Guidance

Do you have a question on living wage? Please share your question with the living wage experts from IDH through email in English. We will try our best to revert within a working day! By contacting and using this resource you are accepting the terms as stipulated in the Living Wage Guidance Disclaimer.

Contact Living Wage Expert Guidance

Living Wage Expert Clinics

a) June: Wednesday June 12, 2024 | 09:00 to 10:00 UTC | Joining Link

b) July: Wednesday July 31, 2024 | 14:00 to 15:00 UTC | Joining Link

c) August: Wednesday August 31, 2024 | 09:00 to 10:00 UTC | Joining Link 

d) September: Thursday September 12, 2024 | 14:00 to 15:00 UTC | Joining Link

e) October: Wednesday October 16, 2024 | 08:00 to 09:00 UTC | Joining Link

f) November: Thursday November 14, 2024 | 15:00 to 16:00 UTC | Joining Link

Partner Event Recording

Session summary:

Willem Uijen, Chief Procurement Officer, Unilever and Rebecca Marmot, Chief Sustainability Officer, Unilever host an event for suppliers to learn about living wage, Unilever's strategy, and support to suppliers. The event is facilitated by IDH.

Access the webinar:

Watch the recording of the webinar here.

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Moderated by:

Sonia Cordera, Director Sector Initiatives, IDH

Panelists:

1. Aurel Grau, Head of Total Rewards, Clariant

2. Bart van Kempen, General Counsel for Northern Europe, Manpower

3. Asuncion Candela Terrasa, Sustainability Planning & Development, Cepsa Chemicals

Access the webinar:

Watch the recording of the webinar here.

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Moderated by:

Jordy van Honk, Global Director Living Wage & Living Income, IDH

Panelists:

1.  Pilar Gamboa, Social & Responsible Supply Leader, Syensqo

2.  Michael Smollan, Chief Growth Officer, Smollan

3.  Vilas Shinde, Chairman & Managing Director, Sahyadri Farms

Access the webinar:

Watch the recording of the webinar here.

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Living Wage in your country

The Brazil Resource Page provides living wage resources in Portuguese: e.g. Playbook and Recording of our Brazil partner event.

The China Resource Page provides living wage resources in Chinese: e.g. Playbook and Recording of our China partner event.

The India Resource Page provides living wage resources in English: e.g. Playbook and Recording of our India partner event.

The Indonesia Resource Page provides living wage resources in Bahasa Indonesia: e.g. Playbook and Recording of our Indonesia partner event.

The Mexico Resource Page provides living wage resources in Spanish: e.g. Playbook and Recording of our Mexico partner event.

The Philippines Resource Page provides living wage resources in English: e.g. Playbook and Recording of our Philippines partner event.

The Thailand Resource Page provides living wage resources in Thai: e.g. Playbook and Recording of our Thailand partner event.