“There is a commercial reason why we believe that a fair living wage is not a cost but an investment.”

AURORA: We last had aformal interview in June 2020in the middle of the Covidlockdown. In many ways,Covid was a defining momentfor businesses the worldover. Three years on, whatwere the lasting lessons ofthe pandemic?
AMIR PARACHA: The pandemicwas a blessing in disguise. Asfar as Unilever is concerned, itmade us put humanity beforecommercial imperatives andtaught us to lead with care,compassion and empathy. Welearned how to build businessthrough conscious capitalismrather than cold-bloodedcapitalism. Unilever is as oldas Pakistan. We have beenhere since 1948 and duringthis time we have talked aboutour presence, our operationsand our brands. When Covidarrived we said to ourselvesthe country needs us, and wemade a pledge that we wouldmake our contribution in terms ofvaccines, PPE and many otherthings. We changed our taglinefrom Unilever in Pakistan toUnilever for Pakistan – and byjust replacing ‘in’ with ‘for’, madea huge difference internally.People felt connected; theyfelt that they were doing morethan just a job. It became amission and a duty to servepeople. We were perceived notas just a commercially drivencompany but one with a largerpurpose. Despite the lockdown,our factory workers came tothe production line because atthat point soap was the onlydeterrent against Covid andour salesforce was constantlyin the market stocking soap.In Pakistan, we are the largestcompany that makes soap, andit was not about selling, it wasabout rendering a service. Wewere the first brand to run anagnostic ad campaign urgingpeople to buy any soap becausesaving lives was more important.When the pandemic endedand things started to ease, wesaw how for the first time ourpeople had felt emotionallyconnected to the company, andwe felt that we had to keep thisspirit alive. So we decided tostick with ‘Unilever for Pakistan.’Then the question was what would be the manifestation of‘Unilever for Pakistan’ afterCovid? There were threeroads: protecting the planet,propagating healthier eating orprotecting livelihoods. We optedfor protecting livelihoods.

A: This was the subject of yourIndependence Day campaign?
AP: Yes. We started thisinitiative in 2021. To be acompany that is focused onproviding a fair living wage.

A: Was this a local initiative ora global one?
AP: The idea was there atthe global level, but it was notintegral to the overall strategyor a rallying cry for everyone inthe organisation. We wanted tomake it a rallying cry. We set atarget that by 2025 all our people – approximately 90,000 – wouldbe earning a fair living wage.Predominantly, they are peoplewho are not on our books; thoseon our books – 700 permanentemployees – are already ona fair living wage. It is moreabout the factory workers whoare third-party workers and thesalesforce who are employed byour distributors. Let me add thatin doing this we are not led by adesire to be ethically compliant;we are led by a commercialcase. There is a commercialreason why we believe that afair living wage is not a cost butan investment.

A: What is a fair livingwage conceptually and inmonetary terms?
AP: That people should earnenough to have a buffer againstany emergency or unaccountedexpense. It provides peoplewith a dignified living so thatwithout having to borrow theycan survive. The Government ofPakistan has set the minimumwage at Rs 32,000 per month,and a fair living wage todaywould be around Rs 60,000.Families in Pakistan need Rs60,000 to have a decent life; onethat is free from worries aboutmanaging school fees or payingfor medical expenses or the rent.

A: What would be thecommercial case?
AP: In 2013 when I was in sales,my attrition rate was 40% –meaning that over a two-yearperiod, the entire workforcechanged. We discovered that there is a direct correlationbetween the more experiencea person has, the better theresults they produce – and thisconvinced us that we needed tofind ways to retain them. The factwas that they were paid so little,that if offered an extra Rs 500they would quit. We decided todouble their salary over the nextthree years and take care of theirmedical and education expenses.In three years, the attrition wentdown from 40 to four – and saleswent up. A direct correlation. Sowhen people say that a fair livingwage is an ethical consideration,my response is, on the contrary,it is a commercial one. Unileveris a for-profit organisation andwe look at it as an investment.We have also taken the conceptto other industries and we haveformed an industry coalition. Todate, it comprises 11 companiesand they made a pledge to taketheir workforce to the fair livingwage. But it is a journey andyou can’t do it overnight. In fact,the idea is starting to become amovement and there is now anunderstanding of the conceptacross industry. For UnileverPakistan it is not about being thebiggest or the most successfulcompany anymore, we want tobe the most soulful company ofPakistan – and we have donevery well commercially in thelast three to four years. Peoplecome to Unilever beyond purelycommercial reasons. They comebecause it gives them purpose;that they are performing a servicefor the country and its people.

A: How does it work inpractice? As it also involvesthird-party workers, doesthis mean an entity otherthan Unilever will have toabsorb an increase in theirHR overheads?
AP: There are two ways to doit. You grow fast enough andcreate enough leverage withinthe system to partially selffund it. Or you start a massivesaving programme withinthe company. We have takenMcKinsey on board to work onidentifying savings. We are abig operation and there is a lotof wastage. We are extractingthat wastage without creatingany additional cost pressureon ourselves or our partners.The idea is to do it in a waythat does not increase the costof doing business, otherwise,you become uncompetitive andin this game you have to staycompetitive. Of course, it iseasier said than done. It has tobe done very intelligently andthe entire organisation has tobe galvanised. This is a fouryear journey and we are doingthis in a way that ensures thecompany remains competitiveand profitable. It is about puttingtogether a road map. Theconcept rests on two metrics.Ability to pay and willingnessto pay. In this respect, thereare four kinds of organisations.Organisations that are ableto pay but are not willing.Organisations that are willing butnot able. Organisations that areable and willing. Organisationsthat are neither able nor willing.We are trying to engage withorganisations to at least comeup to a level of willingness. IfI broaden the canvas to thecountry level, the reality is thatinequality of income in Pakistanis highly concentrated. Accordingto our Human DevelopmentIndex, inequality has goneup; we were 120 out of 160countries; today we are 151. Butthe situation can be improvedwith a fair living wage. Whenincomes go up, living standardsgo up, and when they go up,people buy more products moreoften. It’s like a boomerang.When the overall prosperityof the country goes up, thecompanies operating in thecountry benefit.

A: Why did you decide topublicise this initiative now?
AP: Because we have stresstested the idea for the last threeyears. Now when people askme questions about it, I can giveanswers with conviction.

A: How was this initiativereceived by other companies?
AP: I received a lot of flak inthe initial days. I went on atalk show and spoke about itand a post appeared on socialmedia saying: “Amir Paracha,CEO, Unilever said that thecountry should move away fromminimum wage to fair livingwage,” and it went viral. Somuch so, that at some socialgatherings, people came up to me to say that I was creating abig problem for them by makingsuch statements. My answeris that I was speaking for mycompany. Nevertheless, peopleare starting to accept the idea.This is why I don’t call this aninitiative, but a movement. It maytake another five or 10 years inPakistan for it to gain not justacceptability but adoption. Thisis a long-term movement, not aflash in the pan.

A: Is the industry coalition of11 companies as committed tothe idea as you are?
AP: Many of them have shownwillingness and taken somesteps. Will they continue to stayinvested? I don’t think I am in aposition to comment, but at leastthey have endorsed the concept.

A: At the global level, howinvested is Unilever in thisprogramme? I ask becausewhat happens if and whenAmir Paracha moves on;what are the chances ofthe next CEO bringing thesame commitment you aredisplaying to the project?
AP: Number one, Unileverhas clearly said that improvingoverall livelihoods across theirentire end-to-end value chain isa big part of their agenda – withthe caveat that whatever is done,it has to be commercially viable,because we are answerable toour shareholders. Number two,every Unilever company hasits own P&L to manage andas far as Unilever globally isconcerned, if we can manageour P&L, stay profitable and atthe same time implement thisinitiative, we can go ahead. Thismeans Unilever Pakistan hadto work out its financial modeland make the business case.To your question about whathappens if and when I leave, myhunch is that given that we haveinstitutionalised this programmeall the way down to the lowerrank of the organisation; evenwere I to move away, it willsustain itself. One of the reasonswhy people work for Unilever isbecause this is a company thathas a larger purpose than sellingsoap or ice cream. Millennialswant to join an organisation thatis driving a social cause; theydemand that the organisationthey work for has a position on social issues. It is becomingintegral to any commercialorganisation to take a position ona social cause.

A: What are your thoughts aboutthe current economic crisis?
AP: I am an optimist, and thelast three months have beenbetter than the preceding six.I don’t see any reason whyPakistan cannot come out ofthis crisis, although we havenever been in a crisis as bad asthis one. Before we were ableto get funding from somewhere,but this time it is another story.I think this could well be thebest thing to have happened,because we have had to manageon our own – and we have.However, to get out of this crisisfor good, we need to take somestructural decisions. We need todepoliticise the economy.

A: How difficult has it been tomaintain market share in theface of heightened inflation?
AP: In a high inflation situation,consumers either down-trade orthey downgrade.

A: What is the difference?
AP: Downgrade is when a SurfExcel consumer starts to useRin, or if they already use Rin,they downgrade to Sunlight – sowe have three tiers. Similarly, wehave TRESemmé, Dove, Sunsilkand Lifebuoy. Consumers caneasily downgrade because thesebrands are all doing the samejob but at different price points.Down-trade is when a Surf Exceluser down-trades from a onekilo pack that costs Rs 600 to aRs 100 pack every week, ratherthan paying Rs 600 in one go.

A: Which one is more common?
AP: The downgrade. This ishow we hold on to our categoryfranchise, if not the brandfranchise. We have enoughbrands within each category forconsumers to move down. Thishas been our strategy and thereason why FMCG companiesare usually called all-weathercompanies – boom or bust, wemanage to keep consumers afloat.

A: To what extent is Unileveraffected by the trend to buy local?
AP: In the past, we used tohave what was called thepipeline economy, wherebya brand owned the entireprocess from end-to-end.They manufactured, marketedand sold the product – itwas a pipeline. Today wehave a platform economyand everything is moredemocratised. If you want tolaunch your own shampoo,you can buy the formulationoff the shelf. So a lot of localbrands are coming up andconsumers are moving to thembecause they are good brands – especially because they thinkthey are good value for moneyrather than a way of supportingthe local economy. In fact,multinational brands supportthe economy more, becausethey conduct their businessin the most responsible waypossible. Be it the value system,the working conditions orpaying taxes. Looked at fromthat lens, multinationals dobusiness a lot more responsibly,and I think they have pavedthe way for local companies tocome up to that level.

A: What leadership skills shouldthe CEO in the age of theMillennials and Gen Z possess?
AP: When I started my career 27ago, it was the era of commandand control and a leader had tohave charisma and awe. Today thishas turned into trust and inspire.It is about humility, relatability andease and access. It has been atectonic shift. Today, rather thandictate, you have to inspire peopleto follow a vision – and then youtrust them. Trust that they willwork towards realising that vision.Start-ups are a great example.The humility young entrepreneursbring to their task of building andscaling up a company. They arethe leaders of the future andMillennials are inspired by suchpersonalities and that is how tolead into tomorrow.

Amir Paracha was in conversationwith Mariam Ali Baig.For feedback: aurora@dawn.com