Who Pays for Living Wages? A Shared Responsibility
“The living wage system needs a large number of people, institutions and businesses involved for it to function well.”
At a time when global inequality continues to rise and millions face employment insecurity, the question is no longer whether living wages matter, but how they are delivered in practice.
One of Colombia’s largest banana exporters, Uniban, has been working with IDH and retail partners to address living wage gaps - offering a practical view of what collaboration can achieve - and where it still falls short.
Uniban supplies European markets through a network of 180 farms and around 12,000 workers. The work began with measurement and the adoption of IDH’s Salary Matrix. “We learned the Salary Matrix… and then we trained all the farms that were going to participate,” explains Carolina Jaramillo Ferrer, Sustainability Director at Uniban. The resulting data allowed both producers and buyers to understand where wage gaps existed and how they differed between regions – in this case, Uniban’s main production areas of Urabá and Magdalena.
“We also sat at the table with the retailers… understanding what they wanted, what they needed from us.”
This dialogue - facilitated by IDH - opened up the question: if gaps are visible, who contributes to closing them? For the retailers, this transparency helped shift the conversation from broad commitments to something more concrete - showing where wage gaps exist, how large they are, and how they relate to their sourcing.
So, what did they do?
One practical approach that retailers have adopted is voluntary contributions. Retailers contribute funds, linked to the volumes they source, which are then channelled to workers. In the case of Uniban, the funds were distributed through food and hygiene vouchers which can be redeemed in supermarkets.
However, despite the practical set up and a positive reception, they are not the same as a higher wage.
People feel pleased to receive them… however, they still interpret them as a gift, a bonus. So there’s something we still need to adjust, so they stop feeling like it’s a gift and instead understand that there is a gap we’re trying to address.
This points to a broader challenge: Voluntary mechanisms can help reduce gaps in the short term, but longer-term solutions are needed to ensure wages can be sustainably raised.
If what we ultimately want is to improve people’s quality of life, we should evaluate what has more impact - giving the resources directly to the worker, as the methodology currently suggests, or using the funds to develop social projects in communities like ours, where public services and infrastructure are often insufficient.
Shared responsibility is key
Closing living wage gaps takes shared responsibility across actors and a context specific combination of interventions. This is where Step 4 Implementing Solutions of the IDH Living Wage Roadmap comes into practice. Responsible purchasing practices from buyers, such as paying fair prices that cover costs of production - including living wages - and long-term contracting to provide stability for banana producers, combined with effective social dialogue, can help support sustainably raising wages.
For Uniban, the next steps are clear. Expanding retailer participation is essential, not only to increase resources but to strengthen shared responsibility. “If we want a system capable of fully closing the gap, we need everyone to participate.” At the same time, the company is working to move beyond voluntary contributions towards integrating living wage costs into pricing structures.
Living wages are increasingly recognised as central to inclusive growth and more resilient supply chains. The challenge now is to move from recognition to normalisation - embedding them as a standard way in which business is done.
Uniban’s journey does not offer a finished model. It does, however, show what progress looks like when companies begin to align intent with action.
To hear more from Uniban, watch the 3min interview below:
