Unilever has put in place a global Fair Compensation strategy that was inspired by -and has taken many dimensions and principles from- the Fair Wage approach. It has also committed to pay at least a living wage to all its employees, a target it reached at the end of 2021 and for which it was accredited by the FWN as a global living wage employer early 2022.
UNILEVER: Accredited as Global living wage employer in 2022

While Unilever announced at the Davos Forum at the end of 2020 to have reached its initial target to pay all its own employees at least a living wage [1], it was more recently, early 2022, that it succeeded to be accredited by the Fair Wage Network as a global living wage employer [2]. This is a great achievement following years of progressive catching up, since an initial assessment in 2015 had identified 37 countries with living wage concerns, with approximately 12,000 of Unilever direct employees receiving less than a living wage. Since then Unilever addressed the issues through a systematic road map. This result is also the result of a strong partnership of nearly 10 years between our FWN team and the Rewards teams at Unilever.

An important achievement that paves the way

Unilever every year during its pay review process has been asking their HR director in each country to systematically compare wages of all their individual employees in the different business units of their country to the FWN data available on FWN online tool. This led every year to the identification of the employees still paid below and to a plan to fill the gap. In a few countries where data were not enough, the FWN carried out additional surveys as in Rwanda and UAE. In India workers’ expenditures surveys in Unilever’s factories and farms -to know the level and structure of households’ consumption- combined with surveys among local markets -to know the right prices of basic commodities and services- led for instance, in each of the 17 States of India, to three living wage thresholds, one for rural areas, one for urban areas, and one for metropoles. These living wage thresholds were then applied by Unilever HR directors.
To facilitate the living wage gap analysis, Unilever set up a digitized data system internally to understand where it stood and to address the gap as fast as possible.

FWN accreditation for 2021

During its pay review process of 2021, Unilever shared with the FWN all its wage data and the results of its internal living wage gap analysis, that the FWN verified in two steps: first by checking in depth that Unilever had used the right living wage thresholds and that it also retained the legitimate wage package components; second by carrying out random surveys among workers in a number of business units. This last step is essential to make sure that all workers confirm to be paid at least at the levelling wage threshold. After the successful completion of these two steps validation, Unilever could be certified as a living wage employer and receive the FWN living wage accreditation .[3]

[3] The FWN living wage methodology was recognized by IDH and is also being used by several brands and other stakeholders, see examples at: www.fair-wage.com

An ambition extended to all suppliers by 2030

In 2020, Unilever announced to extend its commitment to pay a living wage to all companies producing for them. As indicated by Unilever’s CEO, Alan Jope: ‘I am convinced that business can help tackle entrenched social inequality. Business is the engine of prosperity that can improve the lives of billions of people around the world. But to do that, business needs to be done in a way that shares that prosperity more equitably. Put simply, too many people are not paid enough. They receive an unfair share of the value they create – and that must change… Unilever has announced a commitment to ensure everyone who directly provides goods and services to the company will earn at least a living wage or a living income by 2030’. [4]

For this to happen Unilever has put an action plan in place and asked its suppliers to commit to a ‘Partner Promise Programme’ on the living wage. [5] Many suppliers already responded to this call, such as Firmenich for instance. [6] Unilever also decided to focus on the most vulnerable workers in manufacturing and agriculture, and they also announced they ‘will work with their suppliers, other businesses, governments and civil society – through their purchasing practices, collaboration and advocacy – to create systemic change and the global adoption of living wage practices.’

A strong motivation to place living wage payment in its business model

Unilever has repeatedly highlighted the importance of paying a living wage as a fundamental human right. At the same time, ‘Paying living wages is not only the core to achieving the Sustainable Development Goals, it’s vital to our ongoing success as a responsible, sustainable business’ (Unilever website).’ As explained by Constantina Tribou, Unilever Head of Rewards: ‘There are many reasons why we need to pay a living wage, as a basic human right, but also for achieving a virtuous circle of economic growth, productivity, efficiencies and ultimately retention of employees. An employee that receives a living wage is more able to have access to goods and services contributing thus to higher consumer demand and ultimately at economic growth for the business. We are convinced that our business can only flourish when those in our communities flourish with us’. [7] This is a message that Unilever has fiercely presented to other stakeholders and in International fora for instance at the UN Global compact and OECD.

The encompassing Fair compensation framework

Living wage is not the only area of Unilever’s commitment in the wage and human resources area. It also put in place already in 2014 a global Fair Compensation strategy that was inspired by -and has taken many dimensions and principles from- the Fair Wage approach. Within this framework, one objective is to ensure that there are no sources of wage discrimination notably by gender.[8] The objective of ‘Market-based compensation’ is also expected to ensure a payment at least at or possibly above market rates. Pay systems are also a priority with in particular ‘Performance-focused compensation providing alignment to their business’. Communication on wages is also seen as unavoidable element of this framework with ‘Open and explainable compensation’[9].

UNILEVER also carried out Fair Wage Assessments among some pilot suppliers for instance in Vietnam, and used the results of the fair wage assessments to make concrete steps towards improved wage practices. This framework could help suppliers to identify necessary levers (in pay systems, in the wage grid etc.) to increase all their starting wages up to a living wage but in a sustainable way, that would help Unilever and its partners to use such commitment as a source of stronger Human resources and long term competitiveness.

[8] Unilever has won a prestigious Catalyst Award for their initiatives to create a gender-balanced and inclusive culture that breaks down stereotypes. They were also listed in Bloomberg’s 2020 Gender-Equality Index.
[9] For a detailed description of tis Fair Wage policy, see on pp. 25-27 of: https://assets.unilever.com/files/92ui5egz/production