CARE International has written about the business case for empowering women producers before; but the financial justification for inclusive business goes much further than that. This week, CARE International published “A Different Cup of Tea: The Business Case for Empowering Workers in the Sri Lankan Tea Sector” which demonstrates that companies investing in one worker empowerment model, the Community Development Forum (CDF), gained $26 for every $1 invested.
Twenty-three tea estates partnering with CARE International Sri Lanka have successfully implemented CDFs, which are ‘mini-parliaments’ that facilitate dialogue between workers, management and the broader community.
The model opens up new channels of communication between stakeholders across the plantation region, serving as a forum where collective decisions about community development priorities and labour conditions are negotiated and decided in a transparent way. An independent assessment by the New Economics Foundation showed there was a 1:26 return on investment for estates, plus additional gains for workers and the community.
That’s a fairly impressive return, but where does the figure come from? Some of the changes that estates saw after implementing CDFs included:
- A 10 to 20 per cent increase in the volume of tea plucked by their workforce;
- A reduction of 16 management hours per week spent mediating disputes;
- Reduced or eliminated participation in national strikes, equivalent to savings of $2,600-$13,300 per estate per day lost; and
- Improved employee perception of economic and social well-being, among other benefits.
Together, the numbers really add up.
Crucially, many of the gains that CARE saw in the tea sector apply to other industries in different regions of the world. The chart below highlights eight different ways that companies can benefit from empowering workers. (There are many social benefits too, which the full business case and additional case studies outline.)
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Business Benefits of Worker Empowerment |
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1 |
Improved Labour Relations |
In contrast to the frequent strikes which beset the sector, the plantations implementing CDFs saw drastically reduced strikes and avoided participation in the national ‘slow-down’ movement. Depending on the point in harvest, the size of the estate and other factors, for each day estates avoided strikes they saved 350,000-1,750,000 rupees, or approximately US$2,600-13,300. |
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2 |
Effective Use of Management Time |
After establishing CDFs, managers spent an average of 16 fewer hours per week settling disputes with workers. This can be attributed both to the overall decrease in grievances, as CDFs allowed the group to proactively identify and address problems, and to the more efficient means of communication represented by the CDF, which allowed managers to collaborate with the workforce as a whole. |
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3 |
Increased Productivity |
Enhanced communication and access to government services such as medical care translated directly into improved productivity. Estates with CDFs reported a 25 per cent increase in the number of hectares plucked by the same size workforce and yielded a 10 to 20 per cent increase in the volume of quality, marketable tea plucked by their workforce. Increased productivity per worker is especially essential in light of recent drop prices for Sri Lankan tea. |
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4 |
Improved Worker Well-being |
In worker reviews, 90 per cent of participants confirmed that economic and social opportunities had increased as a result of the CDF. The sector currently faces a long-term labour shortage as the next generation of tea pluckers increasingly chooses to migrate beyond the plantations, but improved labour relations, coupled with other benefits such as increased wages, present one way to counteract this trend. |
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5 |
Increased Market Opportunity |
By empowering workers, estates benefit from access to new markets. Social and environmental certifications require social audits to prove that international labour standards are met. In this case, the presence of the improved relations and standards that come through the CDF confers a double advantage: first, it makes obtaining certifications easier through improved fulfilment of the labour, occupational health and safety and other base criteria, and, second, it streamlines the administrative process once the certification is obtained. |
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6 |
Fulfilment of Legal Obligations and Voluntary Codes |
Within both national legal structures and international standards such as the United Nations Guiding Principles on Business and Human Rights, there is a strong onus on companies to apply due diligence to prevent human rights violations. This includes requirements to undertake due diligence across supply chains, to consult with relevant stakeholders and to identify potential red flags. Worker empowerment in general and the CDF model in particular are efficient means of creating systems that go beyond social audits to fulfil either legal mandates or voluntary codes. |
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7 |
Social Licence to Operate |
Adhering to national and international labour standard brings benefits to workers and business, ensures a licence to operate, and helps build brand equity. |
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8 |
A Positive Business Environment |
The cumulative impact of the above is a positive business environment. Through linking the estates with local government agencies, CDFs help workers to access the services to which they are entitled, but also to improve workforce health and well-being. Through increased productivity, improved labour relationships, heightened marketed opportunity and more efficient fulfilment of legal obligations plantations operate more smoothly and profitably. |
Overall, the case is clear: from improved labour relations, productivity, market opportunity and social legitimacy to decreased reputational risk, efficient fulfilment of legal obligations and a positive business environment, companies have much to gain from empowering workers.
For more news on private sector development, follow Alexa Roscoe on Twitter @AlexaRoscoe.
