In search for coherence and sustainability, IKEA took decisive steps to place the Fair Wage methodology at the core of its different policies: of Human Resources, of Compensation, and of Sustainability. It also decided to have it applied not only for its suppliers but also for its own employees, with a series of pilot Fair Wage Assessments carried out among suppliers, service providers, stores and own industry groups.
Fair Wage Global Strategy applied in different segments and markets

A diversified approach

IKEA is the brand in the sector of retail and beyond that has taken most innovative initiatives and made concrete steps towards a fair wage global strategy. IKEA implemented pilot studies in several different markets, and also involved workers from different types of companies/partners: own employees of their stores (for instance in Canada, France, Portugal, Spain, China) and their own Industry groups (in Poland and Russia), but also employees of their direct suppliers (notably in Lithuania and Poland) including service suppliers (for instance cleaning services in Russia etc.). At the same time it took commitments to pay a living wage for instance in the UK and other countries.

From assessment to remediation

The furniture company also used the results of the fair wage assessments to make concrete steps towards improved wage practices.

In the US for instance, after the Fair Wage assessment carried out in 2013 in different states identified a lack of wage adjustments from one year to another -that led wages over time to lose ground compared to price increases- IKEA successfully implemented a series of wage increases to help wages of their co-workers to catch up.

It also decided to adjust wages to yearly changes in the costs of living and also adopted a living wage in 2014. As a result, staff turnover decreased by 5%, and IKEA was recognised as a Great Place to Work and was ranked among the Top 100 Employers by Fortune Magazine.

Fair Wage assessments in IKEA stores in Japan also identified wage differentials between full-time and part-time employees. In Japan local regulation stipulated that part time and full time co-workers were not at the same level in the organisation and therefore attracted different pay and benefits structure. With the increasing nature of part time work, this was presenting a challenge for IKEA.

Consequently, IKEA Japan equalized wages and benefits for all their co-workers and was the first employer in Japan to make changes in how part time and full time co-workers were treated, creating equality in not only pay but also in benefits and total experience.

IKEA also carried out a series of discussions with the Government of Japan to improve the legal status and rights of part-time employees. As a result in 2016 the government declared changes to legislation that saw equality for all workers in Japan. IKEA was also recognised as an Employer of Choice and leading the way with equality in Japan. These changes also brought a significant improvement in staff turnover.

In Russia, an active remediation policy was carried out after a fair wage assessment identified a number of wage issues to be improved. This led IKEA Russia to improve its wages and human resources policy.

IKEA also carried out in 2018 a study on wage practices and working conditions in its transportation segment of its global supply chain to better know wages and working conditions of drivers involved in shipments for IKEA especially after a number of articles had attracted attention on drivers’ conditions. IKEA took the commitment to improve the situation in this segment of its supply chain.

Adapting internal tools

At the same time, beyond individual markets, IKEA also put in place a general Fair Wage policy that led to Fair Wage principles for both its suppliers and stores. It is also incorporating better standards and benchmarks on Fair Wage into its code of conduct IWAY.