Register for the Panel Discussion: How can finance and business progress decent work and the living wage? on 19 November
29 January 2021 – Dr. Anna Barford, Prince of Wales Global Sustainability Fellow, reflects on the significance of Unilever’s global commitment to living wages and it potential to create a fairer and more equal society.
“Too many people are not paid enough. They receive an unfair share of the value they create – and that must change.”
Alan Jope, CEO, Unilever
To achieve this change, Unilever are building upon their existing payment of a living wage to directly employed staff, committing that “by 2030 it will refuse to do business with any firm that does not pay at least a living wage or income to its staff.”. This move is much needed and arguably long overdue. People have always needed to be paid at a level which allows them to feed, house, clothe, and educate themselves and their families, and to fully participate within society.
The living wage is rather an old idea, first recorded in 1894 in the writings of the Dewsbery textile factory owner Mark Oldroyd who was motivated to “maintain the worker in the highest state of industrial efficiency”. Five years later William Hesketh Lever began to build Port Sunlight, a model village for workers and their families, an approach also adopted by other socially minded Victorian industrialists as a route to prosperity and efficiency. By the mid-20th century, when economic inequality had reduced, the living wage idea faded, only to reappear towards the end of the last century as inequality worsened and became more entrenched, to the extent that since 2015 the richest 1 per cent owned more wealth than everyone else (Oxfam). It is testament to the severity of inequality and the urgent need for change that Unilever has made this living wage commitment.
Even before the Covid-19 pandemic and associated economic downturn, we faced a global crisis of insufficient work opportunities. Of the jobs which did exist, many led to lives spent in working poverty. In 2017, the majority of workers in Southern Asia and Sub-Saharan Africa lived in poverty due to low wages and little work. Many worked informally, unprotected by labour law or social security schemes, and lived in extreme poverty. This bleak picture exposes how the assertion that work is the route to security and prosperity proves false for at least one in five workers (ILO).
As many lower- and middle-income countries approach ‘peak youth’, when youth populations reach their maximum, the question of youth employment must be addressed urgently. Some countries, such as South Korea, have capitalised on large youth populations and now reap a ‘demographic dividend’ from the fleeting historical moment when a large population of working age has relatively few dependents to care for. There will be no such demographic dividend and associated development for countries where poverty wages are the norm.
With the economic impacts of the Covid-19 estimated by the IMF as a 4.4 per cent shrinkage of the global economy during 2020, and with most countries now in recession, the challenges facing society are more acute than ever. The scars may affect today’s young people throughout their working lives. We have seen this before amongst those who not in education, employment or training: a lack of opportunities for training and work for young people can lead to permanent disadvantage within the labour market. This combination of peak youth and insufficient decent jobs, greatly aggravated by the pandemic fallout, threatens the prosperity of millions worldwide.
Governments, the European Union and the United Nations are well aware of this challenge. The EU is leading the way in stepping up its Youth Guarantee to ensure opportunities for work, education or training for young people. Yet most young people are not reached by such interventions. A dispersed form of leadership is needed to address this urgent global challenge – governments cannot do this alone, nor can young entrepreneurs take on and win against the imbalances of contemporary capitalism (though they have certainly been pushed into this role and continue to pursue it). It is widely acknowledged that business and finance must play a role.
Unilever’s former Chief Executive Paul Polman argued that capitalism can eradicate poverty if it adopts a longer-term outlook; a strong sense of purpose; and builds partnerships to counter the fact that “the world is not functioning for everyone”. What we have seen in Unilever’s announcement represents a bold and crucial step forward, to pay people enough to meet their basic needs and provide for unexpected events. The power of the living wage multiplies when applied to the supply chain. Requiring the suppliers of goods and services to pay at a decent level creates a demand for living wage companies, promising a shift in employment norms. With the right momentum, the move by Unilever will stimulate a wider commitment to shifting labour market conditions towards the goal of ‘decent work’ for all.
Having campaigned successfully for the introduction of the living wage by a former employer, I have seen how it has supported staff living and working in Cambridgeshire. The implementation was uncomplicated, since a wage increase was required for only a small number of direct employees. The scale of Unilever’s commitment dwarfs my own. A global company paying the living wage to its suppliers offers the potential to benefit workers around the world. While the UK Living Wage Foundation allows newly accredited employers three years to shift from their old contracts to fully living wage contracts, the scale of Unilever’s operations means that they have their work cut out to reach their targets within this decade.
And what about young people? Unilever has committed to supporting 10 million young people to gain the skills they will need for the job opportunities of 2030. In addition to skills training, there is an urgent need for job creation schemes, requiring state and industry support. Stimulating labour market demand is critical for creating the job opportunities of the future, especially give trends towards automation. In tandem, stronger social safety nets are required for those unable to find work. If Unilever’s commitment encourages a wider commitment from business and government, it promises a substantial boost towards meeting the UN’s Sustainable Development Goals by 2030.
Unilever’s living wage announcement raises some important questions. Can the company ensure living wage payments to informal workers in informal enterprises? How can living wages be ensured throughout the supply chain? Who will calculate and set these wages in multiple diverse economies? Will these benefits spread from workers to support wider communities, boosting local economies? Will it embolden a movement to legislate for decent working conditions for all? How will higher labour costs be met? At a time of unacceptable and rising global inequality, can we build impetus for a collective transition towards a more redistributive and ethical capitalism? And lastly, what gaps will persist even with a successful implementation of this policy, specifically around labour market demand, social protection, and other decent work criteria?
What interests me about these new commitments is how the company has translated key global challenges into a clear vision for an intervention aimed at a fairer and more equal society. Let’s hope it is the first of many such commitments to come.
Barford, A. 2020. Challenging inequality in Kenya, Mexico and the UK. Third World Quarterly. DOI:10.1080/01436597.2020.1826299 https://www.tandfonline.com/doi/full/10.1080/01436597.2020.1826299
Barford, A. and Coombe, R. 2019. Getting by: young people's working lives. Published by Murray Edwards College, in April 2019. CC BY Creative Commons license. 10.17863/CAM.39460 https://www.repository.cam.ac.uk/handle/1810/292310
