The low prices enjoyed by shoppers at British supermarkets are paid for by poor wages, job insecurity and a denial of basic human rights for workers in some of the world's poorest countries, a report has concluded.
The growing power of big supermarkets is the driving force behind a mode of doing business that is made possible by exploiting workers, particularly women, in developing countries, the report says.
The document, produced by the development agency ActionAid, accuses the supermarkets, who take £7 out of every £10 spent on the high street, of using their vast market power to drive down prices at their overseas suppliers.
The investigation found that supermarkets were paying wages of as little as 5p an hour in some Bangladeshi garment factories, while in India some workers processing cashew nuts were being paid just 30p a day.
ActionAid, which works in more than 40 countries, urges the Government to set up an independent regulator and calls on supermarkets to acknowledge publicly the damaging impacts of buying practices on workers and suppliers, and take concrete steps to address them. It calls for "binding legislation" to help protect workers' rights as voluntary initiatives are not working.
"Labour rights abuses in supermarket supply chains remain systematic, and in fact they are becoming more severe. It is becoming painfully obvious that a decade of voluntary attempts to curb the negative impacts of these practices has failed, and that only binding legislation will have sufficient teeth to make inroads," the charity says.
The report comes mid-way through the Competition Commission's inquiry into the £120bn grocery sector. The watchdog is keen to investigate the relationship between supermarkets and their suppliers but is struggling to persuade suppliers to speak out. It has said it has "concerns" about how the supply chain works in the UK.
ActionAid claims that shopping could become a "tool for poverty reduction" if supermarkets treat their suppliers better so that more of the millions of pounds spent every day on grocery shopping in the UK flowed back to the workers producing what Britons buy. "This is how development happens," it says.
An investigation into how bananas are grown in Costa Rica found that workers' rights, pay and conditions have suffered from the intense price war that rages between UK grocers. Suppliers are forced to absorb the costs of the banana price battle because they need the business: supermarkets typically take between 70 per cent and 90 per cent of a banana supplier's stocks.
In response, wages have dropped to as low as 33p per hour and job insecurity has increased, with women being forced out of permanent jobs into casual, piece-rate work. The charity welcomed recent moves by some UK grocers to stock more Fairtrade-certified bananas, such as Sainsbury's decision to sell only Fairtrade bananas, but said there was a danger that "corporate goodwill to respect people's rights can be reneged on when market conditions get tough".
In the Indian cashew growing industry, ActionAid found that for every pound shoppers spent on the nut in UK supermarkets just 1p went to the women workers who processed the nuts. Another 22p was shared between Indian farmers, traders, processing companies and exporters, leaving 77p for importers, roasters and supermarkets in the UK.
Sainsbury's said it was working hard to address the issues related to labour in the Costa Rican banana industry. "We have invested considerable resources into addressing them," a spokesman said, pointing out that, by July 2007, all of the farmers providing Sainsbury's with bananas would receive a Fairtrade price premium for their crops. "This ground-breaking move has led the industry, with other retailers now following suit," Sainsbury's said.
Tesco defended its relationship with suppliers, saying it worked with them and non-governmental organisations to solve any problems. "It's no secret that conditions in developing countries can be difficult. But these countries and their suppliers believe, like we do, that trade is the best route out of poverty," the group said.
'I suffer from severe pain in my toes and knees'
Bindi, a 58-year-old mother of six, from Kerala in India, works for a large processing company that exports cashew nuts to the UK market. "I have severe pain in my toes and knees and sometimes back pain. But I have to work to fend for myself and my family," she said.
Bindi's hands are covered in blisters. Asked why she does not wear protective gloves, she said: "We have to buy the gloves ourselves; the management does not provide us with gloves. Besides, I will only be able to shell five kilos if I wear gloves instead of the usual 10."
She said: "The managers use malpractices and underweigh the shelled nuts.". A survey found that 45 per cent of cashew workers experience respiratory illnesses, compared with 9 per cent of the wider population. "They will make us sit in the smoke-filled sheds where they fry the nuts and it causes suffocation," said Bindi.
Cashew workers' main concern is their earnings and, in Kerala, most women want their unions to bargain for higher wages.
