NewForesight is pleased to share the third and last in a research series on the challenge of improving wage and working conditions in the tea, coffee and banana sector. The report shows how system dynamics affect the millions of workers active in major tea producing countries (including China, Kenya, India, Malawi, Sri Lanka), most notably wage levels and working conditions. Based on a root cause analysis of the main challenges in smallholder tea holdings and large-scale estates, NewForesight outlines a set of recommendations to drive wage improvements and better working conditions in the tea sector.
Background to the report
The report seeks to contribute to a better understanding of the state of work in the selected sectors and supply chains, identifying opportunities for social dialogue and stakeholder actions that offer a way forward for progress on decent work.
The reports are undertaken as part of an ILO project on Indicators and methodologies for wage setting supported by the Ministry of Foreign Affairs of the Netherlands – and Rainforest Alliance is one of its partners. The aim of the project is to support the capacity of government and social partners to negotiate and set adequate wages and to enable committed industry-wide initiatives or enterprises to leverage better wages for the lowest-paid workers.
Report findings
The report finds that on average, wages of tea workers are in line with minimum wage levels. However, in practice, compliance with minimum wages often remains a challenge in certain production regions. There is often a gap in wages between workers that are hired on a temporary or informal basis, compared to permanent workers. Furthermore, wages are often set at relatively low levels compared to the basic needs of workers and their families.
An unsustainable business case for tea producers means there is limited scope to improve wages. Tea is a labor-intensive crop, with labor costs making up a significant portion of total production costs. As a result, employers of large tea estates struggle to afford the costs of salaried labor – let alone improve wages. At the same time, worldwide the number of informal smallholders is growing. These informal smallholders often hire workers on an informal basis, largely outside of the regulatory system.
Still, the report concludes that change is feasible. Social dialogue has strong potential to improve working conditions, shown by the numerous successful examples of industry-wide collaboration having resulted in wage improvements. To reach effective, multi-stakeholder social dialogue, there is a role to play for all stakeholders in the tea sector: this includes governments & social partners, private sector tea packers & blenders, and NGOs & certification schemes. The report outlines the role of each of these stakeholder groups in order to jointly tackle the root causes that inhibit working conditions from improving.
The figure below illustrates how these stakeholder groups can address the key root causes, and the intended worker impact.
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We encourage all stakeholders to read the report and contribute to improvement of wages and working conditions. The report was developed by Joost Backer, Daniel Pedersen, Jennifer Morton, and Joost Gorter.
Click here to read the report.
To read the other two sectorial reports, click here for the report on the banana sector, and here for the report on the coffee sector.
For any enquiries on the report, please reach out to Joost Backer at joost.backer@newforesight.com