“In WageIndicator's quarterly living wage update, what captivated us the most was the comprehensive basket of components, from transportation to education and food, factored into its living wage calculations. This direct data collection is invaluable to us; it's not just hearsay, we can validate it firsthand. With this transparent data at our disposal, we can delve into the implications on a country-by-country basis, particularly in nations grappling with soaring inflation rates,” says Marina Leal, Manager Sustainability and Human Rights at Natura & Co.
WageIndicator sat down for a conversation with Marina Leal from Natura & Co, a Brazilian global personal cosmetics group headquartered in Sao Paulo, to discuss the company’s motivations for procuring living wage data, the impact it has seen by implementing living wages for all employees, and potential challenges faced along the way.
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| Marina Leal |
What were Natura’s motivations for procuring living wage data?
At Natura & Co, we pioneered the Integrated Profit & Loss Methodology—a management tool that goes beyond financial outcomes to measure our corporate performance's impact on environmental, social, and human dimensions. It reveals when investing in which domain we will have the greatest impact. Through this approach, we discovered that implementing living wages has by far the most profound impact on individuals and society at large. Recognizing its pivotal role, particularly in regions like the global south, we committed ourselves to prioritising income in our strategic initiatives. It's a testament to our belief in the transformative power of income to drive meaningful societal change.
How have you been going about understanding the data and implementing the data on the ground?
First, we needed to understand the data. While you're experts at WageIndicator, we weren't, so we engaged in numerous discussions with you and other institutions to assess the data quality. With various institutions offering different data types, we chose data that we could easily access and analyse.
In WageIndicator's quarterly living wage update, what captivated us the most was the comprehensive basket of components, from transportation to education and food, factored into its living wage calculations. This direct data collection is invaluable to us; it's not just hearsay, we can validate it firsthand. With this transparent data at our disposal, we can delve into the implications on a country-by-country basis, particularly in nations grappling with soaring inflation rates. Understanding which costs are rising or falling is valuable. We can analyse costs and comprehend each country's situation, including regional data.
Our main operations are in Brazil, a large country like any other, so having regional data is invaluable. We utilise this data not only for our employees but also for our consultants, totaling 4 million in Latin America, and for communities in the Amazon, comprising 10,000 families. I learn something new from the spreadsheet every day.
Could you please give a brief overview of the various types of stakeholders you engage with?
So we have employees, consultants and suppliers. Consultants and resellers, though not employees, play a crucial role in our value chain by purchasing and reselling our products directly. While we have no legal or labour relationship with them, we prioritise monitoring their income, particularly as many are women, out of ethical consideration. Similarly, we feel it's ethically important to support communities in the Amazon who act as suppliers, even though we lack any legal obligation, especially as they often rely on traditional activities like nut harvesting.
How many of your female employees or workers are earning the living wage or above the living wage?
All our employees earn a living wage. Among them, 60% are female, with 50% holding leadership positions. It's worth noting that historically, many of the blue-collar workers at the base of our employment pyramid were men earning below a living wage.
Did you conduct a baseline study, before you proceeded to implement Living Wages? What kinds of gaps did you find in what people were earning and should be earning?
First, we had to understand the data source and decide on the methodology, which was a crucial step, especially in Latin America where the conversation about living wages isn't as common as in Europe. Then, we thoroughly examined the methodology and numbers. Next, we benchmarked with companies like Patagonia, Unilever, and L'Oreal to understand how they implemented living wages.
After that, we calculated our gaps and observed how living wage rates changed over three years. This variability showed us the need for annual adjustments. We then determined the costs for each country and job, considering factors like benefits, taxes, bonuses, and commissions.
WageIndicator aided us in projecting living wage costs for 2026 and we integrated them into our budget planning. Looking forward, we'll continue this process for 2027 and beyond, incorporating living wage projections into our long-term strategy.
How do you calculate wages for full time workers/seasonal workers etc?
We calculate wages on a monthly basis rather than hourly, aligning with labour regulations in each country. Our approach differs from many companies that include benefits like health insurance in their wage calculations. Instead, we adhere to guidelines where all earnings are provided directly to employees in the form of base salary and guaranteed payments. We offer additional support through food vouchers, ensuring that employees have autonomy in how they allocate their income.
Who are the key stakeholders involved in implementing the living wage, and what are the main internal concerns about the project?
As the Human Rights lead for Latin America, I co-lead the project focused on employee welfare in collaboration with our HR department. My role entails overseeing the compensation team, responsible for income calculations, with whom I closely collaborated on this initiative. This program underscores our commitment to human rights and sustainability. It's worth noting that I wasn't initially involved in Natura when the living wage initiative began, so I'm not fully aware of all the initial challenges we faced. However, I do know that publicly announcing the living wage target by our CEO, João Paulo Ferreira, significantly facilitated our efforts.
One obstacle we encounter involves the tendency to link discussions on living wages with salary competition. Initially, some voices within the company questioned the need to increase wages further, given that our current salaries are already competitive. Changing this mindset is vital and presents a challenge, as we emphasise that paying a living wage is a matter of human rights, not competition. Moreover, there is a notable absence of discourse on this issue in the global south, highlighting the need for further attention and discussion.
What are the benefits of paying the living wage?
Living wage significantly enhances individuals' quality of life, contributing to well-lived years. Conversely, inadequate wages detract from their well-being. Increased living standards lead to higher tax contributions and reduced reliance on healthcare. Our analysis indicates that for every dollar of revenue, there's a $2.7 positive societal impact.
For those interested, I can provide a report outlining our calculation methodology. Beyond the economic impact, employees take pride in working for a socially responsible company.Our brand's recognition as socially responsible is evident, as seen in invitations to sponsor events like the UN Global Compact.
How has your revenue model or your business model, has that been impacted at know, trying to bring these changes?
No, the financial impact was actually quite low, honestly. While some countries, like Argentina, may have felt a bit strained, overall, the financial impact on our business was minimal. When you consider the size of our payroll, implementing a living income or living wage doesn't seem excessive.
Paying a living wage does increase our payroll expenses, but considering the scale of our payroll, the additional cost is manageable. From a human rights perspective, it was absolutely worth it.
There are various ways to implement a living wage, such as adding it to the base salary or increasing benefits like food vouchers, which can be adjusted accordingly. This approach varied depending on the country, requiring careful consideration and adjustment.
March, 2024