AgroAmerica - Finalist in The Unilever Global Development Award

With 13,000 staff, AgroAmerica has worked hard to not only pay employees a decent salary, but to find out what incomes are required to help its people improve the quality of life for their families.

 

Most companies who take a keen interest in their people and appreciate that they are its most important asset will have been concerned that they earn a decent income. But what does ‘decent’ really mean? How much is enough? What sort of salaries equate to a happy, secure and stable livelihood?

These are the questions that AgroAmerica, a Guatemalan-based grower and distributor of tropical fruits, has been asking itself – a process which has led to it paying staff a living wage. “Since we were founded, people have been the core of our business, and we have been concerned that they earn a decent income,” says CEO Fernando Bolaños. “But over the years we have invested in knowing if we were achieving this goal and started developing the living wage concept.”

As such, the business knows much more about how its workers live and spend their income. “We have learned to redefine our social investment and to be more assertive in how we can provide not only a decent job to our workers but also a good way to raise their families with better opportunities to improving their quality of life.”

Establishing a living wage

It was the implementation a food security and nutritional programme and engagement with employees’ wives that triggered action on the living wage. The company, which employs 13,000 people across Central America, Panama, Peru, Ecuador, the US and Europe, found out that the mothers within a family do not necessarily have the necessary resources, power or influence to apply what they had learned via the programme because their husbands did not share the same vision.

“When we started paying staff a living wage we experienced significantly less absenteeism, fewer accidents, lower rates of staff turnover, a reduction in sick leave, better-motivated staff and an increase in productivity, with people more loyal towards the company,”

Salaries received from AgroAmerica were not adequately distributed for the proper functioning of the household. Acknowledging the situation, the business hired a consultancy to investigate the conditions of employees’ homes – a process which led to the carrying out of a Living Wage Study. This would determine what a ‘liveable wage’ might look like based on an in-depth study of the basic food basket of each member of staff.

Research findings showed employees received an insufficient income to live a dignified life

AgroAmerica, the first Guatemalan company to have conducted such research, found that each employee, working the number of days required by law, was indeed not receiving a sufficient income to live a “dignified life” with his or her family. It enabled the business to better understand the socio-cultural reality of its workers and their families to determine the direction and focus of its social responsibility projects – and to do something about it.

On top of the introduction of a living wage, the initiative has also led to the creation of a number of internal policies for the benefit of workers, such as labour conditions and human rights.

And it is a process of continuous improvement. Every year, the living wage is measured, comparing year incomes with the previous years’, and the minimum wage established by law. An analysis is made, and the business can then determine the gap between minimum wage established by law and AgroAmerica’s salaries.

A fairer economy

It is not just the employees that are benefiting from the paying of a living wage, says the company, pointing to evidence that fairly paid workers are ultimately better for business. “When we started paying staff a living wage we experienced significantly less absenteeism, fewer accidents, lower rates of staff turnover, a reduction in sick leave, better-motivated staff and an increase in productivity, with people more loyal towards the company,” according to the business.

It turns out that the more you pay employees, the harder they work and the more dedicated they are to the job. The company says that with its programme, it has not discovered anything new; all studies indicate that paying living wages brings benefits for all. But it has certainly pioneered a new way of working in Guatemala – a country with one of the highest inequality rates in Latin America and some of the worst poverty rates in the region – going beyond philanthropy to prepare the business for the long-term challenges that lie ahead.