Tesco

Download Tesco's submission (pdf)

Responded to survey: yes

MSI involvement: yes, Ethical Trading Initiative [what's this?]

Grade 2.5: Can offer concrete examples of steps to increase wages in the supplier base, but pilot projects are limited in scope and have significant omissions. [what's this?]

Summary

A thoughtful position statement, but as yet Tesco has no concrete plans to implement a living wages initiative.

Position on living wages

"We subscribe to, and require our suppliers to abide by, [the ETI base code definition of a living wage] for all workers in our supply chain...The lack of a commonly-understood definition means we don’t find it practicable to use the term in day-to-day work."

Work so far on living wages

Tesco's work on wages, “has five broad themes and a number of specific initiatives.” The themes are:

• supporting supplier productivity improvement programmes;

• developing long term plans with suppliers;

• developing Fairtrade [cotton] sources;

• increasing our trade with suppliers showing better ethical credentials and outcomes;

• training workers to improve the understanding of their rights and give them the opportunity to be involved in developing their wages, including through collective bargaining.

Plans on living wages

Tesco gave the example of Bangladesh:

"We believe that wages are best and ideally addressed by national governments setting realistic minimum wage levels. So we sit on the Executive Committee of the influential MFA Forum.

"The next way to address wage levels is cross-industry action. We play a key role in the ETI Wages Project, which is looking at mechanisms for improving wage rates in Bangladesh.

"We do not believe, however, that industry initiatives excuse us from carrying out our own research and action...We are therefore undertaking a major piece of research to survey wages levels at our Bangladeshi supply sites...We intend to continue working through this data with a view to implementing findings on how best to raise wages next year. We accept the principle that increasing wages may require us to pay higher prices."

Other significant information

In a lengthy submission, Tesco listed a number of other activities. These included describing its approach to subcontracting and homeworking, and its 'A-list' suppliers programme, representing 20% of its clothing turnover.

"The idea is that developing a core of strategic, incentivised long-term suppliers gives us a platform to drive innovation and product development in our supply chain, alongside ethical and community initiatives....To qualify as an A-list supplier, each company must show strong compliance with our ethical and technical standards....Members of the A-list are given several KPIs (Key Performance Indicators) to achieve, such as around timely delivery. In return, suppliers are given three-year business projections to enable them to plan their businesses effectively.

"Alongside the development of an A-list supplier scheme, we have increasingly sought to balance out our production orders over the year....placing orders for core, non-fashion items ‘out of season’. This helps suppliers plan their production, even out peaks and troughs in volumes and keep overtime within manageable levels."

Our comments

Tesco didn't describe any concrete initiatives to explore the implementation of living wages, with initiatives explicitly tackling wages limited to tightening up its auditing of wages and conducting 'a major piece of research' in Bangladesh. It is part of the ETI project group, but unlike other members of that project it has not embarked on its own pilot while it waits for the group to move ahead. Its submission was more lengthy and thoughtful than others in the same position, making an explicit acknowledgement that prices paid to suppliers and the stability of relationships are important factors, as well as name-checking freedom of association (though no practical work was mentioned on this).