Unilever’s global living wage pledge deserves our support

Is it possible to smooth the rough edges of capitalism without government intervention? Can it be reformed through companies adopting some of the measures you’ll see this column advocating for, such as the living wage, inclusivity, investing in staff rather than running rolling redundancy programmes, off their own bat?

Unilever has always tried to present itself as a better kind of business. The maker of everything from Marmite to Hellman’s mayonnaise to Dove soap has, for example, been doing things like making commitments on climate change for some time.

It is now, however, also promising to help “build a more inclusive society” by making a number of eye-catching commitments including to spend €2bn (£1.8bn) annually with suppliers owned and managed by people from underrepresented groups by 2025, to pioneer “new employment models”, and to equip 10 million young people with “essential skills to prepare them for job opportunities”.

But the most important pledge is the one to “ensure that everyone who directly provides goods and services to the company earns at least a living wage or income by 2030”.

Unilever is itself a Living Wage employer, at least so far as its UK operations go. It is accredited by the Living Wage Foundation which means paying at least £9.50 an hour and £10.85 in London and agreeing to increase those numbers when new rates are announced. They are calculated based on how much is required to secure an acceptable basic standard of living in the UK.

Employers also have to ensure that people working at functions outsourced to contractors are covered. This ensures that people like cleaners and security guards are covered.

Expecting something like that from suppliers globally is, however, an important extension of the principle. And make no mistake, while it may raise a few eyebrows in the cynical City of London, Unilever has the size and clout to make it happen even if, at 10 years, it’s a something of a long-term project.

Part of the reason for that might be because there will, obviously, be a debate about how you define what a living wage is in the various countries in which Unilever operates.

We know the numbers in the UK thanks to the Foundation’s work. One would hope this initiative would lead to some new applications for accreditation from employers in Unilever’s supply chain here.

In other countries, where the campaign is not active, it might take a little more work although whether it really needs 10 years worth of that is open to question. Perhaps the Foundation could help?

Still, it should be said that Oxfam, which has been working with Unilever, has welcomed the move and called upon others to follow suit.

So they should. The UK Living Wage confers benefits on those that pay it, such as lower rates of absenteeism and staff turnover and better quality of work, as well as on their workforces. It also benefits communities and the wider economy because people on lower wages tend to proportionately spend more of their incomes.

Taking the idea global, extending it to places where wages and working conditions are poor, is to be welcomed especially if other employers find that their feet are held to the fire in the process.

It’s hard to imagine this happening had Kraft Foods succeeded with its unwelcome takeover approach four years ago.

To curry support with investors for rebuffing it, Unilever had to promise some fairly aggressive cost-cutting, which unions raised genuine concerns about. The company’s reputation took a knock in the aftermath as a result.

It would be a delicious irony if Kraft were at some point in the future forced to fall in line with the initiative.  

As for Unilever, if this is another sign that that unhappy period is firmly in the rearview mirror then so much the better. Even if the initiative may not be perfect (see the issues raised about the timescale) it is worthy of support.