Last updated: January 2014
Below The Poverty Line
A report this year from Oxfam found that tea pickers’ wages are often below the poverty line, whether they are on certified or non-certified estates.
It was out of concern over wages in the tea industry that a group of organisations, led by Oxfam and the Ethical Tea Partnership (ETP), commissioned an investigation into workers’ pay and benefits on plantations in Malawi, West Java in Indonesia and Assam in India. These areas were chosen to be representative of the tea export market and included a mix of ethically certified and non-certified estates.
The report found that the tea industry currently pays poverty wages. These are often blanket rates that hover around the producing country’s legal minimum wage or the World Bank’s poverty line. Basic wages are often below the poverty line which may be reached when productivity payments and in-kind benefits are included.
In Assam, India, tea pluckers earn 12p an hour or 89 rupees (£1) a day. The legal minimum daily wage for an unskilled worker in Assam is 158.54 rupees. How wages are set means that the situation is the same across all Assam tea plantations and across all tea brands and certifications.
Through interviews with workers, management and stakeholders on the estates, the research team uncovered a complex web of issues around wages. These included: poor corporate understanding of local wage-setting mechanisms; supplementing wages with in-kind benefits (such as food, fuel, accommodation, childcare) that may be of questionable value to workers; and the disempowerment of female workers (the majority of the workforce).
The obvious implication of poverty wages is that families cannot support themselves on their tea plantation wages2 and children, particularly girls, become vulnerable to traffickers. They are promised good jobs and exciting lives in the city but end up in domestic slavery, suffering physical and sexual abuse. Few are paid and some never see their families again.
Low tea plantation wages feed the supply of traffickers as well as slaves. Why work on the local tea plantation for 500 rupees per month when you could earn 4,000-10,000 rupees per girl from a Delhi ‘placement agency’?
Regardless of whether the tea is for Tetley, Lipton or Twinings; or certified as Fairtrade, Ethical Tea Partnership or Rainforest Alliance, workers are paid the same poverty rate.
This is because, for the wages element of certification, standards only require that wages should not fall below the legal minimum. The report therefore concluded that certification is no guarantee that workers’ wages meet their households’ basic needs.
However, the report focused purely on hired labour on plantations. Smallholders were out of scope for this study. But, Fairtrade International’s own research concluded that the incomes of Malawi tea smallholders increased threefold with Fairtrade, a big contrast to Oxfam’s findings on plantation wages.4 Cafédirect reports that 22% of the value of a box of Cafédirect tea goes directly to the producer co-ops (who are all smallholder tea growers with no estates involved). So it seems that some Fairtrade products may be more beneficial than others – Fairtrade tea from smallholders rather than from plantations.
Ethical certification also brings workers a number of other financial and non-financial benefits, which were also not looked at in Oxfam’s research. For example, Fairtrade means better conditions in terms of overtime, maternity, and written contracts. Also the Fairtrade premium is paid on top of the Fairtrade price and producers decide how to invest it – usually in education, healthcare, farm improvements or processing facilities – to increase income.
What’s going to happen?
After seeing the results of the research, the organisations behind the report, which include Unilever, IDH (the Sustainable Trade Initiative), Fairtrade International, UTZ and Rainforest Alliance now recognise the urgency of the problem and are committed to tackling the problem. They are taking its findings very seriously and have agreed a plan of action to address the issues it uncovered, beginning with expanding the investigation to include other major tea-producing countries and using these investigations to support sustainable livelihoods in ways that are relevant to local workers and their economic and social contexts.
The organisations also plan to improve understanding about wage issues among workers and improve trust and constructive dialogue. Most of the discussions about wage issues in supply chains currently take place at the international level, but this would bring it back to the national context and local realities of the workers themselves.
The organisations have also agreed to change the way that wages and benefits are monitored and audited. The goal is to develop one approach for assessing wages that is applied consistently across the tea sector and to create and maintain a repository of information to be shared between these organisations.
Consumers of certified products can also be reassured that certification organisations have committed to improve the certification process for waged workers so that it requires plantations to gradually increase workers’ wages to the level of a living wage. Fairtrade International has recently finished a public consultation on the draft of a new Standard for Hired Labour. That draft includes attempts to strengthen the ‘teeth’ of Fairtrade certification when it comes to getting beyond paying a minimum wage to paying a ‘living wage’.
“This isn’t a problem we are going to fix overnight” said Rachel Wilshaw, Oxfam’s Ethical Trade Manager, “but in 15 years of working on these issues it is the best chance we have had to make a real difference to the lives of hundreds of thousands of tea pickers. In two or three years from now, I hope women working on tea plantations around the globe will start to experience real change.”
Read the full Oxfam report
Fairtrade International’s response to the report
“Fairtrade alone has limited power to raise sector wages, as they are often negotiated at industry and country/regional level. We therefore seek to work with tea industry partners, other certifiers, NGOs, trade unions, civil society and governments to bridge the wage gap. Our participation in recent industry initiatives such as the Tea 2030 project and the next phase of this, Tea Wages study, will also facilitate discussion on a new approach to setting tea industry wage benchmarks and the promotion of wage bargaining, so that better wages become a commitment of everyone along the Tea supply chain.
Fairtrade contributes directly to alleviating poverty through payment of Fairtrade premiums of over US$6 million per annum to small farmer organizations and plantation workers in the tea sector. Recent impact studies have shown a range of tangible benefits accruing to workers, their families and communities, including in Malawi.
Fairtrade will thus continue to work toward a Living Wage while delivering additional worker benefits through the payment of Fairtrade premiums, linked to sales volumes.”