Unilever Study

Oxfam has a long history of engagement with Unilever at the global level. Building on this experience, during 2011 Oxfam undertook a study of labour standards in Unilever’s operations and supply chain, with Unilever’s active cooperation. Vietnam was selected as the country case study, and an initial Oxfam report was published in 2013.

The aim of the study was to assess labour standards in Unilever’s operations and supply chain, looking at the gaps between the company’s policies and the reality on the ground. A secondary objective was to develop a set of principles and measures to guide Unilever and other companies to meet their social responsibilities.

Oxfam analysed four labour issues. The first was freedom of association and collective bargaining, looking at the extent to which workers could exercise these rights despite the legal limitations in Vietnam and whether Unilever helped facilitate the rights. Secondly, the study looked at wages, including the concept of a ‘living wage’, assessing wage levels in relation to workers’ basic needs. The study also considered working hours and instances of excessive working hours. Finally, we examined contract labour, a precarious form of employment, analysing why jobs are contracted and the impact of this on workers’ well-being.

Global and national findings

At the global level, Unilever’s corporate policies on these four labour issues were found to be adequate, although they were in need of updating in line with current good practice.

At the factory level, the study found that all wages paid in Unilever’s Vietnam factory were higher than the minimum wage and therefore compliant with national law and Unilever policy. However, they were not sufficient to meet the basic needs of employees and their families. The study also found that workers do not have any trusted avenues to raise issues and concerns collectively with management and no opportunity for collective bargaining.

Just over half of the workers in the factory, most of them migrant men, were found to be sub-contracted through a labour provider, rather than being directly employed. These workers had lower wages and benefits than regular employees. While their average basic wages were still in excess of the legal minimum wage and the international poverty line, they were less than half of Oxfam’s estimation of what is needed to cover average expenses.

At the supply chain level, just over half (28) of 48 suppliers interviewed said they were asked to commit to Unilever’s Supplier Code, which sets out expectations of suppliers. The study looked in detail at three suppliers. Of these, two were found to pay wages just above the minimum level. One had problems with seriously excessive hours and another had a high ratio of temporary labour. The third supplier had good labour practices, but there was no evidence that this had anything to do with Unilever’s processes.

A series of recommendations

Based on the study Oxfam developed a number of suggestions. First of all, Oxfam recommended that Unilever should adjust its policies and business model to deliver better quality jobs for workers. This should, for example, include a commitment to support a living wage and to minimise precarious work in Unilever’s operations and supply chain. Secondly, Unilever needs to better align procurement and other business processes with its policies, including training buyers on labour standards and incentivising suppliers to raise labour standards.

Third, there is a need to strengthen the supply chain due diligence process to take account of people’s vulnerability to speak out. This includes raising workers’ awareness of their rights and strengthening their voices, making sure local grievance processes are in line with international standards and ensuring more nuanced audit programmes.

Fourth, Unilever should work with other partners to promote ways to realise workers’ rights and increase their collective leverage. As part of this it was recommended to produce a progress report, enabling Oxfam in Vietnam to check what has changed against the Oxfam recommendations and Unilever commitments.

Fifth, the report included a number of recommendations on how Unilever could address the Vietnam specific concerns at the factory site and with suppliers. Finally, Oxfam recommended Unilever to incorporate measures of labour rights and job quality into its public reporting processes so that stakeholders can assess its progress in managing these issues.

Using the report for policy influencing

The study findings were presented at a very senior level within Unilever and secured CEO commitment to a number of issues, including a sustainable living review in all 180 countries of operation. The report was also listed in Unilever’s ground-breaking human rights report in 2015 as a milestone in the company’s understanding of human and labour rights affecting its supply chain. In Vietnam, the launch of the report reached key government, civil society and media audiences, and also opened the door to discussions with the National Assembly on living wage issues.

Details

Project: Study on labour standards in Unilever’s operations and supply chain

Location: Unilever’s operations globally and nationally

Time frame: 2011-2013; 2015-2016 (progress review)

Funding: Oxfam core funding