Bridging the living wage gap in the banana sector: a collaborative approach

An essential source of income for thousands of rural households in developing countries, bananas are among the most traded fruits worldwide and a gateway product for grocery shoppers. 

For companies that rely on global supply chains, security of supply is a growing concern. Climate change, changing political dynamics, the impact of global supply and demand, as well as labour shortages pose risks to sourcing operations. Globally, over one billion workers earn wages that don’t cover basic needs like food, housing, healthcare, and education. According to the World Economic Forum, implementing a living wage worldwide could generate $4.6 trillion in additional GDP annually through increased productivity and consumer spending.

Ensuring workers earn a living wage is a shared responsibility across global supply chains - from retailers and suppliers to producers and workers’ organisations. For many companies, making this a reality can be challenging. Supply chains are complex, pressure to keep prices low is high, and changing business models isn’t easy. But the consensus is clear:  taking the first step is crucial—and everyone has a role to play.  

Take for example, the banana supply chain. In the supermarkets, bananas beckon shoppers with the promise of low prices in hopes that they stick around and fill their trollies. Those prices, however, have a heavy impact on the people and the environment where bananas are farmed.

Through national commitments, IDH is bringing retailers together to work towards living wages in banana supply chains. These commitments, which include 27 retailers in Belgium, the Netherlands and United Kingdom, have helped align industry efforts and are driving meaningful change in producer regions. 

For companies that take action on living wages, the benefits are clear: 

• Increased productivity, lower turnover, and a stronger business; 
• More motivated and committed workers;
• Improved quality of life for employees and their families. 

IDH recommends that companies use the Roadmap on Living Wages (and its tools) to advance on their living wage journeys and its corresponding tools. In the work with the retailers, IDH also collaborates with other parties in the banana sector including producer associations, traders, certification programs (like Rainforest Alliance and Fairtrade), and international organisations working on the topic such as GIZ, Banana Link and the World Banana Forum

In the work with the retailers, IDH also collaborates with the other key players in the banana sector. We document this work, to help implement sustainable, long-term solutions for fair wages.  

We believe in building on existing industry tools and best practices and amplifying what works across sectors. The following case studies show some of the approaches taken to addressing living wage gaps.  

• Sainsbury’s: Sainsbury’s is proactively addressing living wages for banana workers by investing in fairer pay and committing to environmental and social sustainability. Their goal is to close wage gaps across multiple countries ahead of industry deadlines through voluntary contributions channelled through the Fairtrade approach and longer supplier commitments.  
•  Lidl: Lidl has been working to address living wage gaps for banana workers across its supply chain in Colombia, Guatemala, the Dominican Republic and Ecuador. From monthly food vouchers to direct wage contributions, the retailer is working with suppliers to implement measures that benefit workers and strengthen supply chains.
• Banana Link: Social dialogue is a key long-term strategy to enabling living wages. The Côte d’Ivoire banana sector has focused on collective bargaining - ensuring that worker representation is central to wage negotiations. This has also created a replicable model for sustainable wage improvements across West Africa. This project was co-financed by IDH with the aim to inspire and stimulate replication of the approach across other regions in the banana industry and beyond. 

Achieving living wages requires a systemic shift, with fair prices, responsible purchasing practices, effective social dialogue, and a conducive legislative framework. All actors such as companies, global and national institutions, investors, NGOs, consumers must all play their role to make change happen.  

To create the momentum for large-scale change, we need more companies to directly look at their purchasing practices and promote living wages in their supply chains. An increased market demand for living wage bananas and other products as well is needed to ensure the industry can properly address the subject and ensure living wages are paid throughout the entire sector. Supply chain actors working together under shared responsibility is critical to achieve impact and systematically address the issue.  

For more information on our work in the banana sector, please contact livingwage@idhtrade.org