Home / News & Events / Archive

Oxfam and Unilever on Business and Poverty

2005-09-16

Global Compact participant Unilever and Oxfam have presented an in-depth case study on the link between international business and poverty reduction. The study shows how, and to what extent, the operations of Unilever Indonesia have an impact on poverty – both positive and negative – in Indonesia. It looks at the impact of UI’s entire value chain, from its interactions with small-scale producers in the supply chain to those with low-income consumers, and showcases how international business, through investment, employment, skills development and technology transfer, can contribute to sustainable development and poverty reduction.

The study’s key findings include the following:

  • Unilever Indonesia’s core workforce includes approximately 5000 people, of whom 60% are direct employees, and 40% are contract workers. Indirectly, the full-time equivalent (FTE) of about 300,000 people make their livelihoods in Unilever Indonesia’s value chain.
  • More than half of this employment is found in the distribution and retail chain. This includes an estimated 1.8 million small stores and street vendors.
  • The closer and more formally workers in the value chain are linked with UI’s operations, the more they benefit from the company. Contracting out employment may reduce a company’s ability to monitor the situation of contract workers or suppliers’ employees, and thus result in gaps between corporate policy and practice.
  • Two thirds of the value generated along the chain is distributed to participants other than UI (producers, suppliers, distributors and retailers). Taxes paid by UI to the Indonesian government account for 26% of the value generated in the chain.
  • The value created by poorer people working at either end of the value chain is much lower than the value captured by those who are in direct interaction with UI.
  • Participation in value chains such as UI’s does not automatically guarantee improvements in the lives of people living in poverty.

The case study also illustrates how cooperative arrangements between business and civil society can advance learning and understanding.

Download the Report from Oxfam’s website.