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Minimum Wage & Bonsucro

The Bonsucro Production Standard requires that certified operators must as a minimum follow the local or national minimum wage for all workers. This core condition applies to direct employees but also to any subcontracted workers who work on the premises of the certified operations. Certified mills report their lowest wage rate in relation to the national minimum wage, which is then checked by independent auditors through evidence of payslips and other records.

In 2015, wages paid both at agricultural and industrial operations of certified mills remained above the minimum wage threshold (at 19% above the minimum wage); nonetheless, they have reached their lowest levels since the Bonsucro data collection begun.

In agriculture, the average lowest salary ratio to minimum wage has decreased from its highest level in 2013 (at 28% higher than the local minimum wage) and have reached their lowest level in 2015 (at 19% higher than the local minimum wage).

Likewise, salaries at mills have also faced average ratio decrease. Lowest salaries at mills have a decreased ratio to minimum wage from their highest levels in 2013 (at 33% higher than the local minimum wage) to their lowest level in 2015 (at 24% higher than the minimum wage).

When comparing the evolution of a representative sample of certified mills certified since 2012 across the period, we observe a similar trend of increase and decrease. However, we observe that the representative sample of core mills (certified for the whole of the period) is generally achieving higher ratios to minimum wage than mills certified for less time. The trend is also observed at farm level (+1.6% in 2015 for farm workers - +1.5% at mill level). This denotes a higher attractiveness to workers of these mills compared to the average certified mill but also the overall long-term commitment to better share the added value created with the workers.

The overall decline in the lowest wage ratio may be a result of difficult market conditions (price retraction globally) as well as more country-specific issues (for example financial and political crises in Brazil). However, the same trend was observed in two countries where certification has occurred, for example in the cases of Brazil and Australia. The indicator provides an answer on how operators are comparing in terms of paying legal minimum wage and how supportive they are of their country legislation. The comparison across country shall not let think that Australian wages are at the same level than Brazilian wages, as the indicator evaluates a ratio compared to legal minimum wage. As Australian mills pay a wages closest to the legal minimum wage, this might mean that the legal minimum wage in Australia is sufficient to attract workers and support their livelihood and/or that the level of minimum legal wage constitutes a barrier to further increase. Bonsucro indicators do not help assessing whether wages are in line with living wages. Further investigation and study by Bonsucro would be required to evaluate if the indicator has a positive impact on communities in which farms and mills are located.

Wages are still an area to be explored by Bonsucro in terms of understanding impacts. Due to its intrinsic relationship with household welfare and purchasing power it is one of the key indicators related to human development within the Bonsucro context. Bonsucro should look to benchmark results of certified mills with non-certified mills and also cross-sector to see whether there are differences in terms of economic resilience and sugarcane operators’ ability to offer attractive wages to workers under changing economic circumstances. This is particularly important in a growing number of regions which regularly report shortage of staff, especially in agricultural operations. The power of benchmarking salaries could be used by operators to identify their own attractiveness against peers and adapt their strategy to recruit and retain talents.

Outcome Report 2017

This text is taken from the Bonsucro Outcome Report 2017.

Credits:

Photos: Joe Woodruff / Bonsucro

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