Understanding Fair Trade and Fair Wages 101

Fair Trade follows these principles:

• Producers receive a fair price - a living wage. For commodities, farmers receive a stable, minimum price
• Forced labor and exploitative child labor are not allowed
• A long-term relationship is developed between Buyers and producers
• Producers have access to financial and technical assistance
• Sustainable production techniques are encouraged
• Working conditions are healthy and safe
• Equal employment opportunities are provided for all
• All aspects of trade and production are open to public accountability
There are two types of organizations in the Fair Trade arena. Those that certify products include the Fairtrade Labelling Organization International (FLO) (www.fairtrade.net) and its affiliates, such as TransFairUSA (www.transfairusa.org).
There are others that evaluate companies through the World Fair Trade Organization (www.wfto.org) and its partners such as the Fair Trade Federation, (www.fairtradefederation.org).
FAIR WAGE
Fair wages are determined by a numbers of factors, including the amount of time, skill, and effort involved in production, minimum and living wages in the local context, the purchasing power in a community or area, and other costs of living in the local context. Wages are determined independently from North American wage structures and are designed to provide fair compensation based on the true cost of production.

Fair trade guarantees at least the minimum wage even in countries that have a minimum wage law but do not enforce it. In countries that do not have a minimum wage the buyer of the product is still bound by the fair trade criteria to pay a fair wage in the local context.

Most fair trade products are competitively priced in relation to their conventional counterparts. Fair trade organizations work directly with producers, cutting out exploitative middlemen, so they can keep products affordable for consumers and return a greater percentage of the price to the producers.

There is a large number of Fair Trade products that are not certified at the product level, mostly decorative arts and handcrafts. With these products, Fair Trade takes the approach of certifying wholesale importers and retail outlets who deal directly with artisan cooperatives. This way, the responsibility to pay a fair wage rests with the importer of the goods

So the importer pays fair wage to the producers, they can either directly ask the producers what they deems is a fair and living wage, or the importer can check resources such as the Fair Wage Calculator ( www.fairtradecalculator.org), created by World of Good Development (www.worldofgood.org) to make sure they are in compliance. The tool simply aggregates all the freely available economic information necessary to determine a fair price for goods. It makes the process of determining a fair price more streamlined and accessible.
Companies get involved in fair trade for different reasons. Not all companies have their sights set on capturing an untouched market or focusing on their image. Perhaps they get involved because they wish to be a part of a movement that causes change positively among our brothers and sisters. An idea where everyone benefits from the gifts and talents that each of us employ.

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