Fairphone announced today that it has paid out the first living wage bonus to employees at Arima, the phone company’s production partner in China. The unique bonus system is part of Fairphone’s work to improve worker welfare in its supply chain and is paid on top of the regular salary to balance out the gap between the Chinese minimum wage and living wage. The bonus is a contribution towards reaching a living wage. It will contribute to the overall quality of life of the factory employees, as well as help to improve employee satisfaction and retention rates at the factory. In the long term, it may also reduce the financial need for employees to work overtime.

Moving towards living wages: Financed through every Fairphone 3 purchase

 One reason for long working hours in China are low wages. Many workers want to work long hours to compensate for the gap between what they are paid as a minimum wage and what they need to live. Fairphone’s approach to bridge the gap between minimum and living wage is unique in the industry and an example of Fairphone’s approach to creating scalable models that can be replaced by the rest of the industry. If this approach were to be replicated by all other brands that partner with Arima, 100% of its workforce across all of its factories would be able to earn a living wage.

For the first payout, the workers received a bonus of up to EUR 82 per person – a significant sum considering the legal minimum wage is EUR 260 per month. In direct consultation with Arima’s management and employees, the bonus was distributed to all of the company’s employees, and not just those who work on Fairphone products. To move towards the living wage, EUR 1.50 per Fairphone 3 that is sold, is paid as a bonus directly to employees and will be paid out quarterly going forward. The quarterly bonus was paid out on 15 November 2019 for the first time, financed by the sales of Fairphone 3. This was made possible through the close cooperation between Fairphone and Arima and financed directly from the sales of Fairphone 3.

According to Remco Kouwenhoven, Fairphone’s Social Innovation Lead, “ Paying a bonus towards a living wage shouldn’t be revolutionary. The fact that it is still unique in the industry shows how much there is still to improve. It’s only possible because of the great collaboration with Arima and the support of our customers “

Quarterly payment is part of a larger initiative to improve worker welfare 

The living wage bonus is just one element of Fairphone’s ongoing collaboration with Arima to enhance worker welfare. On top of the direct bonus to workers, Fairphone and Arima have committed to investing USD 100,000 a year combined for three years to cover the cost of the upcoming working condition improvements. Those will focus to improve health and safety, employee satisfaction, representation and retention rates. Throughout the process, one of the most important sources of input is the employees themselves. Based on employee input, third-party assessments and in-depth analysis by Fairphone and Arima, the companies devised a three-year improvement plan with monthly targets.

To date, some of the accomplishments of this ongoing plan to improve working conditions include democratic elections for new employee representatives, constructive dialogue training for management and employee representatives, health & safety training, improved security in the dorms and increased contributions to cover food-related expenses.