6p a T-shirt. 30p an hour for shelling cashews. Supermarkets accused of exploiting women

The Guardian, Terry Macalister

An independent watchdog should be set up to ensure supermarkets do not drive their profits higher on the back of vulnerable workers in developing countries while presenting themselves as socially responsible companies at home, a report demands today.

It claims that while supermarkets are launching new schemes to prove their ethical credentials to UK shoppers, they are locking suppliers - particularly women - into "appallingly" low pay and dangerous conditions abroad.

A spokeswoman for Tesco admitted yesterday it was "no secret that conditions in developing countries can be difficult".

Many of the big grocers have signed up to a voluntary code of conduct called the Ethical Trading Initiative, but the charity ActionAid argues in its report Who Pays? that the voluntary code is barely worth the paper it is written on and it is time for binding measures to be imposed.

"The supermarket giants have proved unwilling or unable to police themselves effectively. The government needs to think very hard about the kind of corporate image UK PLC wants to portray - and if it isn't one of exploitation and hardship then it must step in now," said Claire Melamed, head of trade and corporates at ActionAid.

Researchers working for the charity spent nine months collecting evidence about the way the big supermarkets do business abroad. They said they found numerous examples of British companies locking suppliers into exclusive deals, regularly threatening to "delist" them to extract more favourable terms and joining together in big international buying groups to increase their purchasing power.

ActionAid cites as an example the recent banana price wars between UK supermarkets which, it says, has led to women working on plantations that supply Tesco, Asda and Sainsbury's being forced out of regular work and into casual piece-rate jobs for lower wages. The charity says:

· In Costa Rica wages are so low - as little as 33p an hour - that women have told the charity they cannot afford to take time off when planes spray dangerous pesticide

· In Bangladesh young women are working for as little as 5p an hour to make clothes for Asda and Tesco while working up to 14 hours a day for weeks on end

· In India, ActionAid says pressure from UK supermarkets to drive down prices has led to a rise in black market cashew nut processing plants, where women earn as little as 30p a day and suffer permanent damage to their hands from corrosive acids.

According to ActionAid about 45% of the final retail price of cashews is retained by the supermarket, 54% goes to the roaster, the importer, the producer and to cover transport costs. The processing workers get just 1%. Out of a £2 T-shirt the supermarket takes £1.40 while the Bangladesh worker who makes it will get just 6p.

A Competition Commission inquiry into supermarkets is currently under way and has asked suppliers to provide evidence of poor treatment. ActionAid says the only way forward is for the government to set up an independent regulator.

A spokeswoman for Tesco, which reported annual profits of more than £2.5bn last week, defended the company's position. "Its no secret that conditions in developing countries can be difficult. But these countries and their suppliers believe, like we do, that trade is the best route out of poverty. In conducting trade we uphold and enforce standards laid down by law and by the Ethical Trading Initiative," she said. "We are ready to listen to any ideas for making progress. But we think this will be best achieved not by framing more rules from a distance, but by engaging on the ground."

Neither Asda nor Sainsbury returned calls asking for comment.

How the banana splits

Share of UK supermarket retail price, according to ActionAid research

Supermarket 45%

UK importer/ ripener 18%

Transport 19%

Plantation company 15.5%

Plantation worker 2.5%

Sainsbury’s response to ActionAid report “Who Pays? How British supermarkets are keeping women workers in poverty” [DOC]