1. A small Steering Committee simplifies decision-making, but could impact commitment of other key partners.
Malawi Tea 2020 was a coalition of over 30 organisations. A number of these participated in the Programme’s Steering Committee. Producers were represented by the Tea Association of Malawi (TAML). Since 2018, 2 individual buyers also took part in the Steering Committee.
Grouping buying and producing companies through dedicated representatives simplified decision-making on the Programme governance level. This advanced progress on a number of key activities, especially in the first years of the Programme.
However, more diverse individual producer and buyer representation in the governance structure could have further strengthened commitment and involvement of different partners towards the goals and impact of the Programme.
2. Highly ambitious timelines and goals spark a sense of urgency and commitment, but there is a risk not to deliver.
Malawi Tea 2020 was designed as a five-year, holistic sector programme. The stakeholders ambitiously aimed to fully close the Living Wage gap by 2020. At the end, the Programme achieved to close the gap by 33%.
The 5-year timeframe was a deliberate choice, mainly to highlight the need for immediate action by all stakeholders. This sense of urgency sparked immediate progress and results at the start of the cooperation. However, in later stages of the Programme, the timelines showed not to be feasible to fully close the Living Wage gap.
For future Living Wage programmes, there are two considerations:
- A longer timeframe can make more sense for producing companies from a business and investment perspective. The question remains whether programme partners would have the stamina for longer-term programmes.
- Does the goal always need to be 100% gap closure by the end of the programme? A consideration could be to set a clear ambition for gap closure per year with all stakeholders.
Strong data on living wage benchmarks, prevailing wages and living wage gaps is difficult to obtain and requires effort to keep updated. Because of the support of the independent Wages Committee, the living wage data used under Malawi Tea 2020 was constantly updated, strong and transparent.
The involvement of an independent committee ensured recognition and acknowledgement of all coalition members on the calculated living wage gap. Stakeholder acceptance of the living wage benchmark helped to unlock sector wide commitment to the goal of a living wage by 2020.
A key recommendation is to involve stakeholders that can ensure strong data and guidance tools to measure wages and track progress. The process to collect the data on a yearly basis was long and required a detailed analysis. Tools such as the IDH Salary Matrix can enable easier data collection, if recognized by all stakeholders.
An initial key achievement of Malawi Tea 2020 is the signing of a first-ever sector-wide Collective Bargaining Agreement. This was signed between producers (TAML) and the worker’s union, PAWU.
The CBA strengthens the position of workers and standardized wages and other employment conditions across the sector.In addition, some producers have provided additional in-kind benefits to workers beyond the agreements in the CBA.
In future programmes, a sector-wide approach might be applicable for homogenous sectors, or if the sector wage is close to the living wage benchmark. In absence of these conditions, living wage interventions can benefit from allowing wage differentiation amongst producers in a sector. This allows producers to make progress towards the living wage target on a speed that matches individual producers’ ambitions and business models.
The workers Union, PAWU, has increased its capacity through Malawi tea 2020. Capacity-building of PAWU has resulted in the organization having more organizational manpower, an annual income and increased negotiation skills.
A strong union is key for living wage programmes. It allows for a strong worker voice on the ground, as well as for worker representation in programme decision making, such as Steering Committees.
A significant challenge for PAWU is the seasonal loss of union members. PAWU has to recruit members every new year due to the seasonal contracts that producers are working with. In order to build a stronger and resilient union, this practice needs a change. In addition, PAWU (Union) could have used further support and assistance from a link to its international affiliated union IUF.
Malawi Tea 2020 created insights into how the supply chain could contribute towards closing the living wage gap. Through engagement with buyers, a model on sustainable procurement was developed by Oxfam and IDH. The Model was a first of its kind in the tea industry and provided more insights into the role of commercial relationships and supply chain dynamics in closing the gap.
The Sustainable Procurement Model did not include insights in how the additional value reaches tea workers. Discussion and agreement on value distribution should be made part of the negotiation process between buyers and producers. An accountability mechanism in the supply chain is a crucial step in ensuring that there is also measurable progress for workers.
7. Consumers need to be involved in living wage work, possibly through cooperation with brands with purpose.
Malawi Tea 2020 included the key stakeholders in the tea value chain. It involved all tea producers in the country, and participating buying companies covered a significant amount of the volume sourced from Malawi.
To further increase impact, living wages programmes could consider other players in the value chain. Specifically, involvement of consumers could be beneficial to advancing the goal of achieving a living wage. Especially involvement and creation of awareness of consumers will bring the topic on the agenda for all value chain players.
Based on the Malawi Tea 2020 experience, we can build the business case for closing the gap and create more consumer awareness on living wage. This could support marketing efforts of purposeful brands to attract consumers to further support the living wage journey.
The set-up of Malawi Tea 2020 enabled a uniform approach to close the living wage gap. It had buy-in of key industry stakeholders: all producers were involved, and the buyers represented 60% of the total volume sourced from Malawi. Working towards a living wage will inevitably have an impact on the market price of tea. Due to the single origin focus of the Programme, Malawian producers had to compete with neighbouring markets that could afford lower pricing due to lower wage costs.
Such a single origin approach can therefore harm competitiveness of an industry. For future living wage programmes, a regional outlook is highly needed to not undermine sustainability achievements by a loss in competitiveness by one single origin. For the tea sector, broadening the work to East-Africa and Indian origins could be key in moving forward.
Commodity market dynamics impact the degree to which issues such as living wage can be effectively addressed. Market dynamics and prices greatly influence to ability for producers to pay a living wage to their workers. In a period where prices are low, producers rely on savings to keep up with wage commitments.
Under Malawi Tea 2020, producers often asked for advanced buying commitments to enable them to cover the higher labour costs associated with higher wages. But tea brands’ ability to make forward commitments were dependent to a large extent on whether their customers (such as retail) were making those commitments to them. This complicates making long term volume and pricing commitments.
Inclusion of more retail private sector players, effective campaigning by NGOs or involvement of consumers could be beneficial to advancing the goal of achieving a living wage.
Government policies, such as tax regulations, have a large impact on the income of workers. An unintended impact of wage increases could be that workers have to pay taxes, and therefore remain with a lower net income.
Malawi Tea 2020 was officially supported by the government of Malawi. Through those relations, programme stakeholders were able to indirectly influence the government on tax regulations for workers.
The government of Malawi also announced a significant increase on the country’s minimum wage in 2020. The new minimum wage could lead to retrenchment of workers as it highly increases costs for producers. It is clear that government policies can impact industry operations. Therefore, a close link to government is recommended for advocacy reasons.