Needs assessment

In addition to the calculation of a living wage, explained in Step 2, your company will need to understand the environment in which it operates. Working towards paying living wages is a process and some enabling conditions will need to be in place to achieve this goal. A needs assessment in sourcing areas will help to determine which supply chain interventions will be most impactful to support workers and therefore provide the most return on your company investment. Your company may consider the following steps:

• Understand how your purchasing practices, suppliers’ human resources and pay systems affect suppliers’ abilities to pay workers living wages
• Understand the enabling environment in terms of social dialogue, freedom of association, collective bargaining processes and union representation
• Identify current working condition issues and risks
• Design corresponding solutions that address root causes
• Understand how partners can help implementation and determine potential roles
• Prioritize action based on severity of the need and potential for progress

Create enabling conditions for payment of living wages

In order to encourage a responsible attitude towards wages among their suppliers, your company can support practical actions, such as:

• Improving sourcing strategies and purchasing practices to ensure that suppliers have enough margin to increase wages
• Review your existing code of conduct and policies on wages, and identify opportunities to clarify your position
• In your agreements, specify that suppliers should comply with their country’s legal minimum wage and commit to living wages
• Helping suppliers to improve HR and pay systems

Enable social dialogue, freedom of association & collective bargaining

To help empower workers to voice their needs and negotiate better pay, an enabling environment that supports freedom of association and collective bargaining is key. Your company might need to collaborate with other companies and organizations to bring the desired change at sector or regional level. Your company could engage in partnerships or initiatives that:

• Request that suppliers support social dialogue for wage negotiations by making it a prerequisite of doing business
• Wherever possible, support training of workers on freedom of association, social dialogue, transparent payment systems and collective bargaining agreements
• Support processes for collective bargaining agreements
• Encourage suppliers to establish grievance mechanisms for workers
• Facilitate representation of workers by unions
• Strengthen network of unions for stronger bargaining power

Improve working conditions

Wages are closely linked to working conditions. While working towards living wages can be mid-term to long term process, complementary actions can be taken to improve working conditions in parallel to activities that create the enabling environment toward living wages. Your company may consider exploring the following areas with suppliers:

• Protective equipment
• Capacity building on health and safety measures
• Contracts
• Housing and transport programmes
• Nutrition programmes
• Harassment
• Gender dynamics

Needs assessment

To determine which supply chain interventions will be most impactful to support farmer partners and therefore provide the most return on investment, your company will need to conduct a needs assessment in sourcing areas. Your company may consider the following steps:

• Identify current barriers to farmer facing in production that can be helped through a supply chain intervention
• Engage with the exporting companies wherever relevant
• Design corresponding solutions that address root causes
• Understand how partners can help implementation and determine potential role
• Prioritize action based on needs, potential for progress and company’s roadmap

Specific interventions to increase farmers’ income

It is possible to a degree to raise farmer incomes through selected interventions. Your company will choose interventions based on the needs assessment, identifying the interventions that seem most applicable to address current barriers. The following interventions have shown to increase farmers’ income the most.

Support access to finance

• Promote financial literacy
• Support farmer business schools
• Promote savings-led groups
• Facilitate access to formal financial services
• Provide direct (micro-)credit
• Buy crop/weather insurance

Support access to market

• Ensure transparent price and quality information
• Adjust payment terms and contracts to prevent side selling
• Provide necessary training and services that help farmers meet your company specifications

Provide access to inputs

• Companies provide inputs to the farmers at no cost or at subsidized rates before the planting season. After the harvest, these costs are deducted in proportion to the sale price.
• Companies provide information and training on the appropriate use of inputs.

Strengthen producer collectives 

• Trainings on internal management, operations and financial management
• Tailored services based on farmer needs

Provide technical assistance

• Trainings
• Farmers field school
• Farms development plans
• Promote crop diversification
• Promote climate change adaptation practices
• Post-harvest loss prevention

Implement poverty reduction programmes

• Housing program
• Nutrition program