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With Lessons from a Toddler, Fairtrade Chief Explains How Far the Journey to a Living Wage is

Fairtrade Netherlands’ Policy Officer, Karen Bouwsma, has taken an insider’s look at what is preventing faster progress towards a living wage, and finds that the behavioural patterns of toddlers and their parents may help provide some answers.
For those in Europe, they are familiar with Black Friday, the day of the year when everything is about the lowest price. Nice for the consumer, of course, but how does this focus on low prices relate to promises made by companies to work towards living wages in their supply chains?

Most of the people who produce our food or clothing still do not earn enough to live on: they do not get a living wage.

There is a reason for this. The corporate purse strings are still firmly tightened. Paying structurally more for products from the South in order to make a living wage possible on plantations hardly ever happens. In that respect, the work towards a living wage is still in its infancy.

Strange though it may seem, parallels can be drawn between the behaviour of toddlers and the phase in which many companies find themselves when dealing with a living wage. Let us explore this analogy some more.

What a toddler can teach

Life is not always easy for toddlers and their parents. The little ones suffer from tantrums, have difficulty playing together, take away toys from others, shout ”no!” or ”mine!”. The toddler’s own needs are front and centre that is clear.

Parents do their utmost to teach their children that playing together is good and that it is not just about ‘me’. All in all, it is quite a challenging phase for everyone involved. Many companies that state they are working towards a living wage are also in this phase.

 When we investigate why many of these companies do not yet pay a fair price for their goods, we see a surprising number of similarities with the behaviour of toddlers:

The ‘self-sufficiency’ barrier’: How difficult is it to admit out loud that the profit-driven focus on the lowest possible purchase price stands in the way of sustainable production? This focus does not enable suppliers, that is, the employers on plantations, to pay workers a living wage.

The ‘tantrum’ barrier: Translating the living wage policy into concrete prices is met with lots of resistance. A selection of common reactions: The consumer is not asking for it. What will it cost? Our supply chain is too complex. The countries themselves must do something about wages!

The “no” barrier: When the importance of a fair price is recognised, companies look at each other. Who is crazy enough to pay more? If the competitor is cheaper, you are out of the game. I can’t be the only one to stick my neck out, can I? We need a level playing field first.

The ‘mine!’ barrier: If a company does want to pay more, it likes to do things in its own way. Standing out from the rest is paramount. That may be good, certainly, but is it really that efficient? Why not collaborate more with other parties in the chain instead of duplicating the work of others?

With all these barriers, living wage work will remain in its infancy for a long time, and the employees will be the ones who lose out. To help achieve a living wage on a large scale, fair prices are required and parties in the supply chain must join forces and share the costs.

Growing out of the toddler phase: Consistency, boundaries and rewards are key

Fortunately, experienced parents and early learning specialists provide valuable guidance on how to get through this challenging toddler phase. The solution lies in being consistent, setting boundaries and rewarding good behaviour.

Being consistent means that charging a fair price must be an integral part of companies’ sustainability policies. They must pay the price that makes a living wage possible. Investors, too, must consistently include the payment of fair prices as a condition in their sustainability talks with companies.

Setting limits implies that the government must develop and implement legislation that protects human rights in the supply chain. This will ensure a level playing field for companies. It is important that legislation is enacted that is proportionate for all companies and that explicitly includes living wages.

Rewarding good behaviour is important and needs to be transformed into practical action at the company level. Nowadays, buyers are too unilaterally rewarded for cheap deals. That stands in the way of purchasing at a fair price.

Buyers must be rewarded for sustainable sourcing. The living wage policy must be translated into clear objectives for each department. A sustainable ‘race to the top’ should also be stimulated by the government and investors. Why, for example, is there no tax benefit yet if you buy at fair prices or a financing benefit for investors?

Let’s ensure this toddler phase soon makes way for the new more mature phase, in which responsible purchasing becomes the norm and companies hurry to fulfil living wage promises by paying fair prices.

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