When it comes to long and complex supply chains, the knowledge that all stakeholders are receiving their appropriate share can often be difficult to obtain. It is therefore important to understand whether your living wages and living income policies and activities are being optimally implemented. To do so, it is necessary to monitor and document the effectiveness of your responses to mitigate the adverse impacts of absent living wages and income, thus ensuring continuous improvement.

Tracking and measuring the progress and the effectiveness of your responses should incorporate clearly defined indicators, as well as internal and external feedback that includes affected parties. In practice, you will need to:

1. Set indicators

Set indicators to monitor progress on living wages and living income. This is essential to monitor progress and to establish clear and transparent norms. Indicators can be designed by your company or by an external third-party. Examples of such indicators are:

Living wage indicators

• Use of credible living wage benchmarks.
• Proof of living wage payments to workers (e.g. take-home pay per worker).
• The gap between living and current wages.
• Proof of the existence of collective bargaining mechanisms.
• Suppliers’ commitment to living wages through commercial incentives and long-term contracts.

Living income indicators

• Net income from farm produce (men and women).
• Net income from other sources (men and women).
• Gap between living and current income.
• Food Security (sufficient quantity of food for all household members)

2. Perform periodic reviews

Perform periodic reviews with stakeholders and relevant parties in your supply chains to ensure that measures to mitigate or prevent risk are taken. Concerning this step, it is recommended to:

• Assess stakeholders’ relationships. This can help in establishing transparency throughout your supply chain and ensure that all workers and producers are compensated fairly.
• Consult impacted or potentially impacted parties, including workers, workers’ representatives, trade unions, farmers and farmer cooperatives.

3. Establish an effective monitoring system

Establishing an effective monitoring system can be done internally or by an external third-party. Options for tracking progress include audits, participatory monitoring and performance measuring, among others. In any case, be sure not to overload producer partners or local staff with data collection. Strong and trusting relationships with your suppliers will facilitate the use of participatory approaches for monitoring. Here are some examples of monitoring system methods:

Participatory monitoring

Participatory monitoring, is an integral part of local capacity building and institutional development. This monitoring method may take more time and resources than audits, but they are more cost-effective, and experience shows that they are also more efficient.

In participatory monitoring:^[1],[2]

• Local populations are actively involved in the process rather than simply being sources of information.
• The role of stakeholders is to evaluate, while external people facilitate the process.
• The focus is on building stakeholder capacity for analysis and problem-solving. Stakeholders can design and create solutions to arising problems.
• Favourable conditions are established to generate commitment, so that future follow-up actions can be more easily implemented.

Performance measurement

Performance measurement focuses on regularly assessing the current state of things and tracking its performance over time, cost-effectively. This method is particularly interesting for companies and organisations interested in understanding the livelihood conditions of smallholders at farm and household level. The performance measurement method is characterised by an ongoing data collection process, the results of which can be used to complement more in-depth assessments.^[1]

Learn from the data and, if needed, adjust or redefine your strategy to support adequate response to living wages and living income impacts. It can be useful to translate identified targets into incentive schemes for suppliers who follow the roadmap for raising smallholder’s income and worker’s wages to ensure living wages and living income. Incentive schemes engage suppliers through comprehensive and long-term contracts, payment of premiums, risk sharing, knowledge sharing and preferential sourcing.