Five steps to ensure living wages in Vietnam’s aquaculture sector

IDH, which co-founded the Aquaculture Stewardship Council (ASC) with WWF, has been working for more than ten years towards responsible aquaculture.

For three years, IDH and the fisheries PPP taskforce collaborated on a project promote sustainable aquaculture through strengthening public private collaboration in the Mekong Delta. This resulted in more sustainable resource use and a reduction of antibiotics, an online platform for sharing information on disease and environmental data, and web-based traceability systems for the shrimp and pangasius value chains.

With help from all our partners, we have improved the sustainability of the production of 630,000 tonnes of shrimp, tilapia and pangasius. Now we believe it is time to also focus on living wages in the sector.

While seafood companies want to address living wages, they seldomly act on it. Is this because companies find it too complex and difficult to know wages in their supply chains? After years of working on living wages in different sectors, IDH has developed a 5-step roadmap that can help to secure living wages. Globally, some 800+ companies in six different sectors are already working with our roadmap and tools and we are now focusing on ensuring the living wage in Vietnam’s aquaculture sector.

Living wage: what do we mean?

Before we dive into living wages for the seafood industry, let’s first explain what we mean by “living wages”. Earning a living wage means workers receive sufficient wages to afford a decent standard of living for the worker and their family. Elements of a decent standard of living include food, water, housing, education, health care, transportation, clothing and other essential needs – including provision for unexpected events. A living wage takes into account the difference between net and gross pay, so employees are sure to take home a sufficient amount to cover for those expenses.

What is the difference between a living wage and a minimum wage? Minimum wages are prescribed wage levels that are mandatory by local or national law. In some cases, they are sector specific. Minimum wages are set by governments and often reflect the supply and demand of labour—balancing needs of employers and employees.

Step 1: understand the living wage in Vietnam

Now let us take one step at the time and use examples from Vietnam. The first step is to identify the living wage in your region of interest. There are different living wage benchmark methodologies. Each one has its own approach for calculating the living wage. To ensure a methodology is rigorous and consistent, IDH has developed a process to recognise living wage benchmark methodologies that meet nine criteria for quality. Through this process, we have recognised five methodologies that can be used: the Full-fledged Anker Methodology; the Wage Indicator Typical Family Methodology; the Fair Wage Network Typical Family Methodology; the Anker Reference Value Methodology; and the Living Wage for US Monthly Methodology.

Our benchmark finder tool helps companies find credible living wage benchmarks from every country and region. The tool shows that there are living wage benchmarks available for Vietnam, both publicly and for purchase.

To grasp this a bit more, let us look at some data. The Anker methodology, for example, states that for rural Vietnam in 2020, the living wage is 4,618,167 Vietnam Dong (VND) per month, which is equivalent to $199 per month. Although we need to recognise the diversity of different provinces, and we need to take inflation into account for 2022, this already provides us with a good starting point for understanding the living wage in rural Vietnam.

Step 2: Understand what the LW gap is by using IDH’s Salary Matrix

Next is to evaluate how the total remuneration received by your employees (including wages, bonuses and in-kind benefits) compares to the relevant living wage benchmark for your region. We developed the IDH Salary Matrix to help you. This tool supports supply chain efforts on wage transparency, is publicly available and can be used by producers to understand their situation in terms of wages. Data inserted in the tool are not shared with anyone unless the user approves.

Originally the Salary Matrix only addressed primary production, but we are extending it to manufacturing and are piloting it in the seafood sector in Vietnam. In the Ca Mau and Kien Giang provinces, we plan to work with five seafood processing plants to understand the difference between the current remuneration of workers and the living wage benchmark in the region. In the coming months, the processing plants will roll out the Salary Matrix to better understand their situation.

Step 3: Verification

The third step to address living wages in your supply chain is to verify calculations of living wage gaps. IDH has developed guidelines for verifying living wage gaps (preferably through third-party auditing) and a corresponding base report, which serves as the physical evidence for third-party verification of living wage gaps. Guidelines have also been developed for first- and second-party auditors. These guidelines have been developed to support schemes and auditing bodies interested in verifying living wage gaps.

Through a partnership with the Impact Buying Academy there is a training programme for trainers of auditors and directly to auditors who want to assist companies in the verification of living wage gaps. The programme is based on the guidelines for verifying living wage gaps and the proper use of the Salary Matrix to support living wage auditing. We think it would be beneficial for aquaculture certification schemes to also be trained, so that the industry can hopefully soon rely on verified data when it comes to LW gaps. Consequently, they will be able to validate the pilot results in Ca Mau and Kien Giang.

Step 4: Close living wage gaps

Any living wage gaps need to be addressed along the entire value chain. Through constant identification of the best practices within our own work, as well as that of other companies, we can support seafood companies with recommendations on how to close the living wage gaps. We, for example, identified 13 direct interventions by buyers and producers, such as enabling social dialogue.

IDH partnered with the Vietnam General Confederation of Labour and CNV International in a pilot project on multi-company collective bargaining agreements (MCCBAs) in the seafood processing industry in Ca Mau and Kien Giang provinces. At present, eight seafood companies have been encouraged to pilot the approach and proposed practices for closing living wage gaps. Increasing wages, in-kind benefits and improving working conditions are also key topics in relevant social dialogues and core contents of the MCCBAs signed in other sectors in Vietnam. Thus MCCBAs can be a useful tool to reducing living wage gaps and improving working conditions for local employees and industrial relations.

Similar approaches or pilot projects can be developed and implemented in other areas of the world with the support of IDH as co-funding and strategic partners.

Step 5: share lessons

We believe the complex concept of living wages can be tackled by seafood companies in these steps, with the last step being to share lessons and insights with peers. Such lessons can benefit a larger audience, just as the seafood sector benefits from the lessons we learned in other sectors. We at IDH are eager to share our knowledge of securing living wages for workers in the seafood sector.