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23 Apr 2024

Lidl Germany and Sainsbury's 'sidestep' joint retailer approach on living wages

European retailers from four countries are working together to implement living wages in their banana supply chains through an initiative known as ‘Better Together’, supported by the German Development Agency GIZ, and sustainable trade social enterprise IDH. Through this initiative, retailers decided to put aside competition and look for sustainable, collaborative solutions - in recognition of the importance of taking shared responsibility for a supply chain that has for years been beset by price wars and a "race to the bottom". This initiative includes Sainsbury's, and previously Lidl Germany (which has subsequently pulled out).

In February 2024, Banana Link posted a blog post suggesting that Sainsbury's and Lidl Germany were "sidestepping" the joint retailer approach. Despite signing onto a joint statement (through its Belgian and UK subsidiaries in the case of Lidl Germany), asserting the importance of shared responsibility for raising wages in banana supply chains, and putting aside competition to look for sustainable solutions, both retailers, in February 2024, issued statements suggesting they were opting to establish the payment of living wages through administering an additional premium (in the case of Sainsburys) or bonuses and cash payments (in the case of Lidl).

In its post, Banana Link suggested that the retailers were "rejecting the trend of retailers working together to find holistic solutions to complex supply chain problems, [and rather placing] value on having made swift decisions to implement living wages", stating that "when it comes to changing the lives of agricultural workers in the Global South, the situation is full of complexities for which there is no ‘quick fix’".

Lidl Germany's approach is criticised for being: "top-down, lacking engagement with other supply chain actors and neglect[ing] the role of worker representatives and/or trade unions", as well as failing to consider existing conditions and wage structures at production level. It has not made any commitment to signing longer term contracts with suppliers to enable living wages to be paid in the long term. Banana Link also highlighted Lidl Germany's failure to assert the importance of freedom of association and the right to collective bargaining as a route to higher wages.

Unlike Lidl, Sainsbury's has committed to long-term contracts with suppliers.

However, Banana Link also raises concerns about reliance by both companies on certification schemes to "verify the wages that workers are paid, and / or to administer a ‘living wage premium’ or ‘bonus’ scheme" - as well as the well-known limitations of audits in detecting violations and protecting workers' rights.

In March 2024, the Business and Human Rights Resource Centre asked Lidl Germany and Sainsbury's for their responses to the Banana Link post.

Lidl Germany was asked:

  1. What are the reasons for Lidl Germany’s decision to pursue individual over collective action to implement living wages in its banana supply chain?
  2. Will Lidl Germany recognise the essential role of trade unions and collective bargaining in ensuring sustainable living wages for workers in its supply chain, and commit to dialogue with trade unions to this end? If not, what are the reasons for this?
  3. Will Lidl Germany commit to long-term contracts with suppliers to enable them to sustainably implement living wages? If not, what are the reasons for this, and how will Lidl Germany ensure it is able to pay living wages to workers in its banana supply chain in the long term without such a commitment?
  4. Why is Lidl Germany relying on certification and auditing programmes to verify wages and administer premiums and bonuses, despite the well-documented limitations of these programmes in protecting workers’ rights, and how does Lidl Germany respond to the allegation that it is undermining the role of trade unions and “failing to recognise workers as agents of change in their own lives”?

Sainsbury's was asked:

  1. What is Sainsbury’s response to the suggestion that it has decided to prioritise individual action to implement living wages in its banana supply chain?
  2. On what basis has Sainsbury’s come to the decision to use premium payments to implement living wages in its banana supply chain? Will this be supported by other actions to ensure sustainable living wages for workers?
  3. Will Sainsbury’s confirm its belief in the essential role of trade unions and collective bargaining in ensuring sustainable living wages for workers in its supply chain, and commit to dialogue with trade unions to this end?
  4. Does Sainsbury’s acknowledge the limitations of audits and certification schemes as a means of ensuring protection of workers’ rights on plantations and have a plan for mitigating these limitations?

In its response to the Resource Centre, Lidl responded to criticism of its failure to recognise the role of trade unions in securing higher wages by stating: "Trade unions have an important role in collective bargaining and setting standards for fair remuneration and worker rights ... However, we have to acknowledge that in the banana industry not all workers are organized within worker organisations, and we wanted to reach all workers in our supply chain through the project, so we worked with each plantation individually." Sainsbury's said its approach was "designed in consultation with suppliers, producers and worker committees (through Fairtrade) and is considered industry leading".

Full responses from both companies can be seen below.