New coalition formed to address low wages in the tea industry

A new coalition of tea companies, non-governmental organizations and certification organizations said today that systemic problems are locking-in low wages for tea workers. 

The coalition is committed to working with other key stakeholders, including tea producers, governments, retailers and trade unions, to find a solution.

A new report, Understanding Wage Issues in the Tea Industry, released today by Oxfam and the Ethical Tea Partnership, assesses the pay and benefits of workers on tea plantations in Malawi, India and Indonesia.

The report found that the combined value of tea pickers’ pay and benefits in Malawi is around average for the country but only about half the World Bank’s poverty line income of $2 per person per day. In Assam, India, tea pickers earn just above the World Bank poverty line and under the average Indian wage. In West Java, Indonesia, pickers’ incomes are well above the poverty line but only a quarter of what the average Indonesian earns. In all cases workers’ pay meets legal minimum wage requirements.

Systemic problems

Researchers identified a number of systemic problems that are locking in low wages, including:

• Workers’ pay is set at a national or regional level, and not by individual plantations. Pay is pegged to the legal minimum wage – but this is often less than what is needed to cover households’ basic needs.
• The history and structure of the plantation sector means that, in some countries, in-kind benefits, such as housing, form a significant amount of workers’ income, yet the quality and uptake of these benefits can vary significantly between estates.
• The majority of workers, particularly women, have little say in pay and benefit negotiations.
• Wages are influenced by regional government policies to maximise rural employment. These policies set worker numbers for plantations, reducing producers’ ability to manage their productivity and costs effectively.

Researchers found that the wages on estates certified by Fairtrade International, Rainforest Alliance and UTZ Certified were the same as for non-certified estates. This is because the certification process for plantation workers focuses on whether wages meet the minimum legal requirements. Certification is an important tool which has helped improve the livelihoods of smallholder producers across the globe and brings a range of benefits to workers which are not explored in the report.

Action plans

Having embraced the report’s findings, coalition members’ will use their various spheres of influence to bring new organizations into the project and will develop its next phase to include:

• Working with national stakeholders to develop country specific action plans to tackle low wages and broader poverty issues in tea communities
• Further dialogue with key in-country influencers and stakeholders including tea producers, trade unions, governments and retailers to ensure broader and deeper understanding of the issues and challenges raised in the report 
• Strengthening certification processes. Fairtrade International, Rainforest Alliance and UTZ Certified, have all committed to strengthen both their standards in relation to workers wages and the processes for implementing these standards.

Stephen Hale, GROW spokesperson said: “Workers behind the world’s favorite brew deserve a living wage. However no matter how big and powerful, individual tea companies or certification organizations cannot tackle the deep-rooted and complex barriers to a living wage on their own. The best chance we have of eradicating poverty wages is for the whole industry - producers, governments, retailers, trade unions, companies and certification organizations - to work together to find a solution. We are delighted that process has now started and will continue to support its progress. Oxfam’s GROW campaign is working for a fair food system for everyone including the workers behind the world’s favorite brew.”

Sarah Roberts, Executive Director, Ethical Tea Partnership said: “This project has already been very useful in terms of increasing understanding of the factors which affect the wages of workers on tea plantations. This gives us all a much firmer foundation from which to deal with the challenges ahead. There is much that we can build on from this initial work, including strengthening the diverse coalition of interested organizations willing to work together. It will need all of our combined efforts to make progress. At ETP, we will continue to use our expertise, convening power and relationships inside and outside the tea supply chain to increase the impact of the work that we are all doing to improve the lives of tea workers.”