United behind a common general ‘Fair compensation’ framework
First, 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.
As indicated on their website: ‘If economic growth is to be inclusive and sustainable, workers need to receive fair compensation. Not only is this core to achieving the Sustainable Development Goals, it’s vital to our ongoing success as a responsible, sustainable business.’
Within this framework, one objective is to ensure that there are no sources of wage discrimination notably by gender. 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’.
A worldwide commitment to the living wage
In the UK, Unilever became an accredited Living Wage employer in 2015 while it committed to do the same for all its employees in the world and to achieve this target by 2020.
For reaching this target, UNILEVER is asking its HR directors in each market all over the world to monitor individual employees’ wage of all their direct companies to make sure that they do not remain below the living wage benchmark that the FairWageNetwork has defined for more than 200 countries.
In particular, they assess whether the current fixed compensation paid to all their lowest pay grade full-time employees (including factory and non-factory employees) in each country is meeting living wage standards while they apply the basic principle that their standard employees must receive, at the very minimum, fixed and guaranteed levels of earnings that are above their country’s living wage benchmark.
This has helped UNILEVER to progressively reduce the living wage gap in its different markets. In 2017, internal checks revealed that 7,252 employees from 37 countries were receiving less than the living wage for their country, down from 9,987 across 34 countries in 2016.
This is against an employee population of 161,000 in 2017. Remediation plans were put in place to increase pay for these employees so that they gain sufficient guaranteed fixed earnings to be above the living wage. Further progress was registered in 2018 and the target to pay a living wage to all its employees could be reached by UNILEVER already by the end of 2019.
Pilot fair wage assessments
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.
The objective was to improve the compensation arrangements for the lowest level workers at their factories in Vietnam, with also the help from Oxfam on the living wage front. This was more than just the actual pay amounts and included ensuring the workers understood how their pay was set, what it covered, what benefits were available and clarifying whether they were direct employees or contractors.