IDH pilots new mechanism to improve the livelihoods of tea workers

IDH has launched a pilot with LIPTON Teas and Infusions, Twinings, and Taylors of Harrogate to improve remuneration  in selected tea estates in Kenya, Sri Lanka and Malawi.

Current market dynamics make enforcing a living wage challenging as the jobs are often casual, work is rarely for pre-determined brands, and producers struggle with costs, including labour. Furthermore, a global pursuit of producing greater volumes of tea has outstripped demand, to the detriment of quality and causing commoditisation for the industry.

Consequently, most tea workers around the world earn significantly below what is considered a ‘Living Wage’, in line with a decent standard of living. Base wages are generally not enough, and the combined value of bonus payments and in-kind benefits still do not add up to cover costs for a decent living.

Over the past 18 months, IDH has convened a broad group of packers, brands, and producers to take action on living wages. With the support of NewForesight Consultancy, IDH and the coalition have explored solutions to increase the value reaching tea workers. In consultations with both producers and buyers, the coalition has landed on a ‘jointly agreed, pro-rata based Living Wage Differential’ as a chosen collection and distribution mechanism. In the long-term, IDH believes that the entire supply chain needs to reflect sustainable production costs to ensure a decent standard of living for tea workers.

LIPTON Tea & Infusion, Twinings, Taylors of Harrogate are the first companies to pilot this mechanism, with the following tea estates: Sasini Limited & Nandi Tea (Kenya), Bogawantalawa Tea Estates PLC (Sri Lanka) and Lujeri Tea Estates (Malawi).

“Taylors are committed to improving wages and incomes across our supply chains. We’re delighted to be involved in this pilot and to be taking the next step towards improving livelihoods in the tea sector. Making progress in this area is incredibly challenging and industry wide collaboration is critical, which is why we are proud to be partnering with producers and with other tea brands on this initiative.” Frank Tanner, Taylors of Harrogate.

The pro-rata based Living Wage Differential’ mechanism was chosen because it:

• Ensures transparent, data driven calculations of the required differential through the IDH Salary Matrix.
• Allows brand owners to contribute proportionally to their volumes sourced.
• Ensures that producers and buyers can work within their supply chains, thus building stronger and longer-term relationships and the ability to share learnings and best practices.

How does the mechanism work?

The mechanism  is based on a ‘differential’, a € / kg value, which is determined based on the living wage gap calculated by the IDH Salary Matrix. Brands will pay this differential in proportion to the tea volumes sourced from a given producer, and the contributions will be transferred as ring-fenced funds to be paid out to workers (either as base wage, bonus payments, or in-kind benefits). The mechanism also includes robust assurance to ensure that the financial contributions reach the workers.

"Working together, we want to crack the complexity that has held back progress to date. This pilot goes beyond improving pay because when the work is valued, then the people are too. Our commitment to raising standards goes hand in hand with our dedication to improving tea quality too, by which we will create greater value for all, from workers to consumers." Gareth Mead, LIPTON Teas and Infusions.

Acknowledging the significant living wage gaps and the limited sourcing volumes by committed companies, these three companies will not close the living wage gap alone. However, the pilot will showcase that progress can be made in improving the livelihoods of tea workers. And while there's still a journey ahead to achieve more sustainable impact, we applaud that these tea brands and producers are taking a meaningful step with us toward enhancing the livelihoods of tea workers.

For more information, contact: Judith Fraats & Marlene Hoekstra .