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Do Fairtrade employers pay fair wages? The evidence suggests they do not.

Tom Holmer, 23 March 2015

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Is a poor person, dependent on wage labour for survival, better off working for an employer with Fairtrade accreditation than for one without it? The answer produced by a major research project at the School of Oriental and African Studies (SOAS) in London might surprise you.

The £700,000 Fair Trade, Employment and Poverty Reduction project -- funded by the UK Department of International Development (DFID) -- was outlined last week by two of the SOAS research team, Carlos Oya and Deborah Johnston. The four-year study looked at the coffee and flowers sectors in Ethiopia and coffee and tea in Uganda.

It involved a quasi-census of the communities concerned, which established the extent of reliance on wage labour (about 60%), plus a survey of 1,700 workers, longitudinal research of 400 and 115 work history interviews. It compared not only Fairtrade employers with others but also large with small, so that the accreditation variable was distinguished from the effects of scale.

Under just about every indication, the research report showed that workers were better off working for organisations which were not part of the Fairtrade network. The three headline results were:

  1. Wage employment was much more prevalent in agriculture than had been assumed in poverty reduction strategies focused on small or self-employed producers and farmers;
  2. The agricultural workers researched were exceptionally poor, even by the standards of average wages within the countries concerned;
  3. There was no evidence that Fairtrade certification improved conditions for wage workers.

At the lowest end of the labour market the conditions and wages for these mainly seasonal labourers is poor. The research highlighted not only low pay but also sexual harassment of women, child labour and lack of access to facilities which might be available to those who were in more secure employment, including support for education of their children.

The report is worth reading almost for these issues alone, the result of painstaking interviews with workers to discuss their lives. Indeed, some of the researchers faced threats of violence from various interests in both countries, experiences described in the report’s appendices.

Many of the results they found concerning Fairtrade echo those of other studies into certification and consumer movements – that the workers are often unaware that their workplace is part of an effort to ensure ‘better’ standards, and have no knowledge of the certification system or what it is meant to offer them.

Questions about who benefitted from Fairtrade, and the ‘Fairtrade premium’ (i.e. “an additional sum of money paid on top of the Fairtrade minimum price that farmers and workers invest in social, environmental and economic developmental projects to improve their businesses and their communities,”  as the Fairtrade Foundation’s UK website puts it) had equally disappointing replies at the SOAS seminar. The premium had been used in one case to provide a health centre which was only for permanent workers; toilets provided were only for the use of management; a dining room was only for the workers in the factory, but not for those in the fields, although the latter had the poorest and most precarious jobs.

The researchers put some of the blame for the conditions they discovered on the lack of emphasis on conditions for wage workers, previously thought to be an insignificant minority when compared to rural entrepreneurs, small holders and cooperative partners who are more likely to benefit from Fairtrade.

The report itself lists a number of recommendations for Fairtrade, including improving their system of monitoring in order to improve the conditions of wage workers. It recommends that governments and donors intervene to deal with the issues these workers face, including child labour, pesticide use and obstacles to trade union organisation.

Fairtrade published a short response to the research, which acknowledged the need to do more for agricultural labour, and resolved to tackle the problems uncovered in Ethiopia and Uganda. The statement indicated that Fairtrade had made substantial progress in 2013 in improving their hired labour standards and in progress towards a living wage. Fairtrade expressed disappointment with the study, and made the point that they had made a difference to the lives of 1.4 million farmers and workers.

The implications of the SOAS study are unlikely to be limited to Ethiopia and Uganda and in any case go beyond Fairtrade, which covers only a tiny fraction of coffee, tea and cut flowers production. It underlines the huge barriers to being able to effectively improve the livelihoods of the poorest people in the world, showing that the trickle-down effect of helping employers, while necessary, is insufficient to reach the bottom of the pile, to the most exploited and the most vulnerable.

Those barriers are concerned not only with the terms of trade but also with greed. For example, while increasing the price of flowers to give the pickers a living wage would add only a tiny amount to the price paid by the consumer, it doesnt it happen because others in the value chain could pocket the extra without passing it down as intended. Fairtrade would like to eliminate these barriers but cannot.

  • Tom Holmer is an associate consultant with Public World, currently working on our new Goodship project in partnership with the International Transport Workers' Federation's Seafarers Trust. Come back soon for more news about that exciting project!
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