Supporting suppliers to improve workers’ welfare in Indonesia

Supporting suppliers to improve workers’ welfare in Indonesia

March 6, 2018

Wilmar and TFT have been addressing workers’ welfare at supplier PT. Abdi Budi Mulia (ABM) as part of wider efforts to implement Wilmar’s NDPE policy

Since the announcement of its integrated No Deforestation, No Peat, No Exploitation Policy (NDPE) in December 2013, Wilmar has been working to advance the production of environmentally and socially responsible palm oil throughout its own mills, plantations and its third-party suppliers. A key aspect of efforts to achieve this goal has been the direct engagement and support provided to third-party suppliers.

Alongside palm oil industry efforts to improve practices, civil society organisations continue to independently monitor progress. In December 2016, Amnesty International (AI) published a report highlighting labour rights violations in Indonesia’s palm oil industry relating to child labour, minimum wage, health and safety, gender discrimination and high production targets.  PT. Abdi Budi Mulia (ABM), one of the companies named in the report, is Wilmar’s supplier.  After the release of the report, TFT undertook an assessment visit in December 2016 to assess labour practices at PT. ABM. A number of the issues identified by AI were also recognised by TFT.

This initial engagement with PT. ABM led to a longer-term project to support them in improving their practices, referred to as a Support For Transformation (SFT) project, by TFT in partnership with Wilmar.

SFT projects are six to 12-month projects that aim to change practices on the ground for companies, to assist and support them in their journey of transformation. In Indonesia, TFT is undertaking such projects within the palm oil supply chain, engaging supply chain actors to improve their practices in accordance with sustainability standards.

The SFT project involves a process of on-site engagement to ensure a mutual understanding of the project objectives and establish ownership of the process. By working intensively with companies at site, TFT aims to facilitate solutions to their labour practice challenges through an understanding of the specific conditions.

With support from RB (Reckitt Benckiser Group PLC), a TFT brand member, the project was formally launched in April 2017 at a pre-engagement meeting with TFT, PT. ABM and Wilmar. TFT visited PT. ABM over three separate visits in 2017 to undertake workers’ consultations, build the capacity of management to improve practices and verify changes on the ground. PT. ABM worked to improve its practices through the creation of appropriate policies and implementation of agreed action plans.

Summary of Key Outcomes

  • 56 casual workers and 6 sub-contracted workers have been promoted to permanent status. This is part of a longer-term plan to promote all casual and sub-contracted workers to a permanent workforce, thus reducing workers’ vulnerability to exploitative conditions;
  • While sub-contracted workers await promotion, PT. ABM has signed new agreements with their labour contractors obliging them to provide their workers with work agreements and minimum wage (as per sectoral wage guidelines). These higher incomes also aim at reducing the need for sub-contracted workers to bring their family to help them in the plantations – thus minimising the risk of child and unpaid family workers;
  • ABM has also improved workers’ safety by ensuring all workers in plantations and mills received Personal Protective Equipment (PPE). In addition, regular awareness-raising is carried out amongst all workers to ensure they understand the importance of wearing their PPE while at work;
  • ABM established a Gender Committee, an internal grievance mechanism as well as suggestion boxes at the mill, plantation and workers’ accommodation to ensure workers have access to remedy in case they have issues related to their living or working conditions.

These steps taken by PT. ABM are positive developments along the longer journey of transformation that PT. ABM has committed to implement. Through further support to PT. ABM, Wilmar can ensure that these promising initial efforts towards transformation will be carried forward. Wilmar and TFT will continue to support PT. ABM in a technical and advisory capacity throughout 2018 to this end.