The request: IDH sought to bring together a consortium of major tea brands and producers to drive commitments in the global tea sector towards higher premiums to enable living wages among tea workers in tea producing countries.
Activities: We first established the global Living Wage Gap in Sri Lanka, India, Malawi and Kenya, and drove the design of different collection and distribution mechanisms for the funds. The project responded to the following questions:
- What is the total amount needed to reduce the Living Wage gap? Based on primary data on prevailing wages of key tea estates, we calculated the total Living Wage gap.
- How can downstream brands enable tea producers to pay out higher wages to their workers on estates and in tea processing factories? We developed a pro-rata differential that allows brands to pay an additional amount for each kilo of tea they procure from producers.
- How can we allocate the payments in a way that builds on existing social bargaining structures, equitably compensating workers that need it most? We carefully assessed the political, social and regulatory wage-setting structures in each region, deciding in the most equitable and effective way to allocate payments to workers, thereby distinguishing between base wages, bonus payments and in-kind benefits.
With LIPTON Tea & Infusion, Twinings, Taylors of Harrogate, Starbucks and IDH, we are piloting these mechanisms to improve the livelihoods of workers.
Our value: Extensive knowledge and understanding of living wages, the tea sector supply chains, as well as sector convening to deliver greater impact at scale.