Unilever is one of the first major corporations to make a commitment to ensure at least a living wage is paid to employees from across its supply chain.
According to Norman Pickavance, co-founder, The Financial Inclusion Alliance, the planned changes will provide a major challenge to HR directors everywhere and could see many workers lifted out of poverty.
Speaking to HR magazine, Pickavance said: “Paying living wage to employees of suppliers will mean Unilever will now need to look more closely at employment conditions of suppliers, from cleaners to delivery drivers.”
The hope, he added, is that other aspects of supplier employment contracts, such as working hours, will also now be addressed.
“If so it will help lift millions of workers out of poverty,” he said.
Unite, the trade union that represents all Unilever employees, has welcomed the pledge. However, it urged the company to do so before its target date of 2030.
Unite national officer Rhys McCarthy said: “In the UK, Unilever, working with Unite, has already implemented its living wage pledge, based on the Living Wage Foundation rates, for subcontracted workers at its factories and offices.
“We would therefore also welcome working with Unilever throughout its UK supply chain to ensure both a real living wage and freedom of association are achieved.”
It is not the only business raising employees' pay this year.
Earlier this month, supermarket chain Morrisons announced it would be becoming the first UK supermarket to pay its staff a minimum wage of £10 per hour.
Unilever's living wage announcement is part of a wide-ranging set of commitments and actions aimed to raise living standards across its value chain.
It said it hopes it will create opportunities through inclusivity and prepare people for the future of work.
Alan Jope, Unilever CEO, said he felt the two biggest threats that the world currently faces are climate change and social inequality.
He said: “The past year has undoubtedly widened the social divide, and decisive and collective action is needed to build a society that helps to improve livelihoods, embraces diversity, nurtures talent, and offers opportunities for everyone.”
“We believe the actions we are committing to will make Unilever a better, stronger business; ready for the huge societal changes we are experiencing today – changes that will only accelerate.
“Without a healthy society, there cannot be a healthy business,” he added.