Towards a Living Wage in the sugarcane sector: Identifying feasible benchmark methodologies

Abstract

Bonsucro is currently in the process of revising its Production Standard in line with the ISEAL Standard Setting Code. The Bonsucro Production Standard sets the global framework for the sustainable production of sugarcane and derived products. It also helps farmers and mills to measure their productivity and key environmental and social impacts. A key focus of the current revision process is how to provide a decent living wage to Bonsucro members’ employees.

Bonsucro is aiming to adopt a methodology that offers high credibility and precision while requiring a low level of resources. This study provides a thorough review of existing benchmark methodologies that can function as a decent or living wage benchmark methodology for Bonsucro. Seven benchmark methodologies were shortlisted and assessed based on 11 sub-criteria related to credibility and precision, and resource-intensiveness.

This study also quantified the benchmark methodology for five selected countries, namely Brazil, South Africa, Guatemala, India, and Thailand for a quantitative comparison of the potential impact on minimum wage levels. The three highest scoring methodologies are: 1) WageIndicator Foundation, 2) Anker Methodology and the 3) SAI SA8000. All three methodologies are used for living wage calculations. None of the poverty measures analyzed showed potential as a proxy for a decent wage methodology.

The analysis showed several trade-offs between credibility and resource-intensiveness. If Bonsucro wants to opt for the most credible living wage benchmark methodology, it should strongly consider opting for the Anker methodology already adopted by other standards organizations. However, the Anker methodology is very resource-intensive, and this would require Bonsucro to change the implementation plan of operators calculating the benchmark individually and instead opt for Bonsucro financing benchmark studies in applicable regions, a potentially very cumbersome exercise.

WageIndicator Foundation was found to be the most balanced and applicable option for Bonsucro, as it can provide access to a database of regional living wage benchmarks and at the same time prevent operators from having the responsibility of calculating the benchmark themselves. If data is not available for a Bonsucro-certified region in the database, new benchmarks can easily be developed using WageIndicator Foundation’s Cost of Living Survey available online or offline via an App.

The quantification showed that the WageIndicator Foundation benchmarks would require a large relative increase from current legal minimum wages in all countries analyzed with Guatemala as the only exception. South Africa has the highest relative change (223%) followed by India and Brazil (144% and 120% respectively). The large relative increase is due to the use of country-level living wage averages gathered from the public WageIndicator database. Regionally applicable benchmarks (accessed with a paid subscription) would very likely lead to lower relative changes. In comparison, the Anker methodology shows the lowest variation in relative change across countries with the only exception of Brazil which has a relative change of 63%.

Given the nature of sugarcane production being highly competitive and labor-intensive, it is recommended that Bonsucro investigates further the impact on cost of production across origins and production systems and the subsequent impact on regional competitiveness.