Interview Dutch Association of World shops (DAWS)
The World Shops (‘Wereldwinkels' in Dutch) refer to shops in the Netherlands selling Fair Trade products from OECD countries. The products sold at World Shops are produced and traded according to Fair Trade Standards developed to enhance product quality and improving the income and working condition of the producers. The Dutch Association of World Shops (DAWS), certifies and monitors traders and next to that checks at random producers to ensure that all products sold in the shops meet the Fair Trade criteria. DAWS is a major player in Living Wage advocacy in the Netherlands as one of the Fair trade criteria is the payment of living wages to producers.
Berenschot (BT): Why do you consider it important to include ‘living wage' in your supplier's code? Huub Jansen and Elsbeth Fabels (HJ & EF): As a Fairtrade company our goal is to improve the living and working conditions of producers in developing countries through trade. To reach this goal Fairtrade criteria have been set. These criteria include next to standards for good and healthy working conditions also standards for payment of fair and decent wages. The payment of fair and decent wages is important as it increases the economic security for the producers, which is in line with the objectives of Fairtrade. And let's be honest: a living wage is just enough to cover one's basic needs, it is not a high standard but a necessity.
BT: How is it calculated? HB & EF: We developed a calculation that covers the producers basic needs (food, shelter and clothing), education for their children, medical expenses and some discretionary income. This calculation method is based on the "food basket" method: what does a basket filled with healthy nutritious food costs in the local context; then multiply this amount by a certain factor so that it covers the costs of living (food and non-food) for an average family. This ‘food basket' method is also used by other organisations such as Social Accountability International (SAI) and the Asian Floor Wage Alliance (AFWA). However, these different methods vary when it comes to determining food and non-food costs, family size and number of working adults per family. For DAWS it has always been important to consult with producers and workers as part of the calculation of a living wage. Last year DAWS has revised their guideline on Living Wage. After research and comparison with SAI, AFWA and findings of Richard Anker of the ILO, it was concluded that the level of our Living Wages was low. Therefor the multiplication factor in our calculation method was raised and it is now tested in a one year pilot that we have started in December 2012 with six of our importers.
BT: How is it monitored? HB & EF: As DAWS certifies importers on basis of their compliance with Fairtrade criteria we assign external auditors to check the calculations and payments to the producers. Audits are conducted on importers in the Netherlands and checks on exporters and producers are made on a random basis. If they do not comply, follow-up actions are formulated including how and when it should be improved. This is monitored by DAWS together with the auditors.
BT: How does it affect price/profit? HB & EF: This will be tested and researched in more detail during the pilot. We developed a costprice sheet which is a tool that can be used by importers to analyse the costs through their chain in a more systematic way, this allows them to locate areas of improvements and thus become more efficient. Consequently, decreasing costs can possibly compensate for the increase in wages derived from the payment of Living Wage.
BT: What are the obstacles for implementing a living wage? HB & EF: The obstacles are various, such as the argument that as importer being one of many buyers he/she does not have enough leverage to persuade the producer to pay a living wage. This issue along with many others will be researched in our pilot. Nevertheless, we do think that it is possible to implement a living wage, because we have seen many examples in which it has been done. So we would like to focus on the possibilities to implement a living wage, instead of using the ‘obstacles' as a reason not to implement a living wage. But DAWS also understands that it should be done step by step.
BT: What would be ways to tackle these obstacles? HB & EF: It would help a lot if the government would set rules on the payment of a Living Wage, even better if this would be done on a European and international level. In this way it can be enforced. The issue is also much broader than our small organisation can handle.
BT: How can our EU conference help you, e.g. by presenting a living wage Road Map? HB & EF: It would help to internationally establish the Living Wage and share it by all stakeholders in the chain. Moreover, it would be a good idea to organise a platform in which all initiatives that are working on calculating and enforcing Living Wages can share experiences and join forces to keep this important issue on the agenda.