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Unilever promises living wages to suppliers' employees

In its effort to create a “more equitable and inclusive society” Unilever is committing to a new set of corporate goals, including ensuring that by 2030, all employees of suppliers that directly provide goods and services to earn a living wage or income as well as spending €2 billion annually by 2020 with suppliers owned by underrepresented groups.

Promising a living wage to the employees of suppliers is a novel initiative in the CPG space and it expands on the British company’s policy that requires its 65,000 direct suppliers to pay legal minimum wages to workers. Internally, Unilever already provides a living wage to its own employees.

Unilever has not explicitly defined what will constitute a living wage, but it said the figure is a sum that allows people to afford a decent standard of living, covering a family’s basic needs: food, water, housing, education, healthcare, transportation, clothing; and includes a provision for unexpected events.

The dedication of Unilever to this initiative was underscored by their chief human resources officer Leena Nair who told the BBC in a statement that suppliers not paying their employees according to these new standards may lose their contracts with the firm.

The 190 countries in which Unilever operates are many of the same ones that are continually criticized for working conditions, so increasing wages is likely to have a significant impact on employees’ standard of living. In Côte d’Ivoire, where Unilever sources cocoa for its Magnum ice cream brand, CNN Business cited data from the Global Living Wage Coalition showing that a living wage would be a 68% increase over the national minimum wage recorded in the country for 2020.

Aside from just augmenting the funds in workers’ pockets, higher wages have also been shown to have additional benefits, including retention of skilled workers and more productive work, a result that could benefit Unilever as competition to attract workers to food and beverage manufacturing increases.

Even if fulfilling these promises cost the company additional money, a spokesperson told CNN Business that the expense will be "absorbed in the value chain." Long term, the company said that it hopes to make a living wage the baseline pay rate for workers in the countries in which it operates.

Additionally, this move is likely to appeal to consumers who are increasingly interested in supporting companies that align with their values. To complement this move, Unilever will also look to support suppliers that are small and medium-sized businesses owned and managed by women, under-represented racial and ethnic groups, people with disabilities and LGBTQI+ populations.