Livingincomemeasurement
Wherewestandandwhat’sle.todevelop?
Feb23,2016
PersonalreflecDonsby
KrisDnKomives,Director,Impacts
MakaibariTeaEstate,India©DidierGenDlhomme,FairtradeInternaDonal
StarDngproposiDon:
Weknowhowtocalculatealiving
income.
Whatwedonotknowishowweexpect
agriculturetocontributetoaliving
income.Thisiswherewearestuck.
©RSPO
©DrAsrilDarussaminforRSPO
Alivingincomeisthe
netincomeofa
household,earned/
generatedunder
condiDonsofdecent
work,sufficientto
enableallmembers
ofthe(average)
householdtoafford
adecentstandardof
living.
ProposeddefiniFonof
livingincomefromFeb
2015workshop
.
CoffeeSeedsKenya©4CAssociaDon,ClaireHogg
Alivingincomeisthe
netincomeofa
household,earned/
generatedunder
condiDonsofdecent
work,sufficientto
enableallmembers
ofthe(average)
householdtoafford
adecentstandardof
living.
It’sabouthouseholds–not
agriculturalhouseholds.
It’saboutaffordingadecentstandard
ofliving.
Forconceptualclarity,let’sdrop
‘earnedundercondiDonsof
decentworkfornow’.That’s
aboutHOW,notaboutWHAT.
CoffeeSeedsKenya©4CAssociaDon,ClaireHogg
Whatisalivingincome?
ItisanormaFvebenchmark.
› RepresentshowmuchincomeanaveragefamilyinaparDcular
placewouldrequiretoafforda‘decent’standardofliving
› DecencyneedstobeoperaDonalized
•  Bestdonethroughanagreedmethodologytoensurethatwe
aretalkingaboutthesamething.
Canwebuildontheworkofthe
GlobalLivingWageCoaliFon?
A coalition of six sustainability standards and the ISEAL
Alliance, covering multiple sectors and products
Working together to measure, promote, and implement a
living wage in the sectors in which we are active
Working together to establish benchmarks using a shared
definition of Living Wage and the Anker Methodology for
developing Living Wage Benchmarks
AcorestrengthoftheAnkermethodology
isoperaFonalizing‘decency’
1. Components of a
basic but decent
life for a family
Cost of food –
for model diet
Cost of
decent
housing
Cost of
basic but
decent life
for a family
3. From net living
wage to gross living
wage
Net
LIVING
WAGE
Number of
workers
per family
Net living
wage
Cost of basic
but decent life
for reference
size family
Cost of
other
essential
needs
Small
margin for
unforseen
events
2. From cost of basic but
decent lifestyle to net
living wage
Payroll
deductions
and taxes
Gross
LIVING
WAGE
Adecentstandardoflivingincludes:
› Food:
›  ModeldietmeeDngFAOandWHOnutriDonal
requirementsandlocalfoodpreferences.
› Housing
›  Meetscommonprinciplesofadequatehousing
(IntlCovonEcon,Social,andCulturalRights;ILO
recommendaDons,WHO,UN-Habitat)
›  E.gdurable,sufficientlivingspace,safewater,
sanitarytoilt,venDlaDon,foodstorage,
protecDonfromcold,damp,etc.Notinslumor
unsafearea.
› AlsoeducaDon,healthcare,
transport,clothing,andother
essenDalneedsincludingprovisionfor
unexpectedevents
Peruviancoffeefarmerandwife©RainforestAlliance
TheAnkermethodologyiswell-groundedin
internaFonalstandardsof‘decency’.
PlustheGlobalLivingWageCoaliFonisalreadymaking
thiscalculaFoninmanyareasaroundtheworld.
Wecouldargueoverthemethodologyand
exactbenchmarkcalculaDon,buthowfar
wouldthatgetus?
ThesebenchmarksareanindicaDon,foran
averagefamily,notanabsolutetarget.
Fairtrade olive oil in Palestine © Simon Rawles, Fairtrade International
Livingwagebenchmarkscompleted,in
process,orplanned
China–6UrbanBenchmarks
Mexico–Rural
Pakistan-Urban
DominicanRepublic-Rural
Nicaragua,
Guatemala,
Honduras–
Rural
Rwanda-Rural
Tanzania-Rural
Brazil–Rural
Ethiopia–Rural(2
areas)
Kenya–Rural,
Semi-urban
Malawi-Rural
SouthAfrica-Rural
Bangladesh
-Urban
India–Urban
andrural
SriLanka-Rural
Vietnam–Rural
andUrban
WecouldconFnuetodiscussthemethodologyforthisfamily-level
benchmark,buthowfarwouldthatgetus?
Thesebenchmarksare
anindicaDon,foran
averagefamily…notan
absolutetarget.
Mining©EduardoMarDno,FairtradeInternaDonal
TherearelimitaDonstoanyhouseholdlevelincomebenchmark–e.g.intrahouseholdresourcedistribuDon,averagetargetswon’tmeetneedsofallfamilies
TeaharvesFnginIndonesia©UTZCerFfied
Alivingincomeisthe
netincomeofa
familyinaparFcular
place,sufficientto
affordadecent
standardoflivingfor
allmembersofthe
family.
ProposeddefiniFonofliving
incometoalignwiththeAnker
methodology.
Not‘household’butfamily.
‘Netincome’isincomea.ertaxes(or
incomethehouseholdcanactuallyspent).
Easiertolookatannualincomethan
monthlyincomeifwewanttoapplythis
tothecontextofseasonalorunstable
incomes.
JennipherWekaka,Uganda©SimonRawles,FairtradeInternaDonal
Figuringoutthe‘incomegap’
requirescomparingtheliving
wagebenchmarktoactual
annualhouseholdincome
(‘income’availabletohelp
affordadecentstandardof
living)
Farm
In-kindandcash
contribuDonoffarm
acDviDesto
householdsabilityto
affordadecent
standardofliving
Joborbusinessor…
In-kindorcash
contribuDonofother
acDviDestofamily’sability
toaffordadecentstandard
ofliving
Annualfamilyincome
StarDngproposiDon:
Weknowhowtocalculatealiving
income.
Whatwedonotknowishowweexpect
agriculturetocontributetoaliving
income.Thisiswherewearestuck.
©RSPO
©DrAsrilDarussaminforRSPO
ThemethodologicalquesFonswehave
beenstrugglingwitharenotaboutthe
costofadecentstandardofliving.They
areabouthowincomeisactuallyearned.
› Whatisdifferentaboutfarmers?:
-  Farmingasabusiness;farmersareentrepreneurs
-  NeedforanaddiDonalinvestment,risk,orentrepreneurial
premium?
-  Whatdoesitmeantosay‘earnedundercondiDonsofdecent
work’forfarmers?HowdowethinkaboutDmeinvestmentby
farmers?
-  FarmersgrowmulDplecropsandareinvolvedinsubsistence
farming.Farminghouseholdsalsohavejobsandrunbusinesses.
–whatpercentageofalivingincomedoweexpecttocome
fromonecrop?
1.  DofarmersneedforanaddiFonal
investment,risk,orentrepreneurial
premium?
-Isthisaboutincomeneedsofthe
farmingfamily,orofafarmingbusiness?
-DoesitaffectouresDmateofliving
incomeoroffarmrevenueneeds?
Farm
In-kindandcash
contribuDonoffarm
acDviDesto
householdsabilityto
affordadecent
standardofliving
Wouldaffecttargetssethere….
Joborbusinessor…
In-kindorcash
contribuDonofother
acDviDestofamily’sability
toaffordadecentstandard
ofliving
Annualfamilyincome
Nothere….
2.Whatdoesitmeantosay‘earned
undercondiFonsofdecentwork’for
farmers?HowdowethinkaboutFme
investmentbyfarmers?
Farm
In-kindandcash
contribuDonoffarm
acDviDesto
householdsabilityto
affordadecent
standardofliving
Wouldaffecttargetssethere….
Joborbusinessor…
In-kindorcash
contribuDonofother
acDviDestofamily’sability
toaffordadecentstandard
ofliving
Annualfamilyincome
Nothere….
Let’slookathowthisworkswitha
livingwagetarget….
Job
In-kind+cashwage
contribuDontofamily’s
abilitytoaffordadecent
standardofliving
Familyincome
LivingwageistheremuneraDon
receivedforastandardworkweekby
aworkerinaparDcularplacesufficient
toaffordadecentstandardofliving
fortheworkerandherorhisfamily.
Netlivingwage=
Costofadecentstandardofliving/
averagenumberofworkersperfamily
2.Whatpercentageoflivingincomedo
weexpecttocomefromonecrop?
Farm
In-kindandcash
contribuDonoffarm
acDviDesto
householdsabilityto
affordadecent
standardofliving
Wouldaffecttargetssethere….
Joborbusinessor…
In-kindorcash
contribuDonofother
acDviDestofamily’sability
toaffordadecentstandard
ofliving
Annualfamilyincome
Nothere….
AreyouconvincedthattheseremainingquesFonsdo
notaffectthelivingincomeconceptand
measurement?
Theyareimportantforsomeusesofthelivingincome
concept.
› Whatcanwedowithout
addressingthesequesDons?
•  Assessgapbetween
farmingfamilyincomeand
livingincome
•  Studyormodelhow
changesinfarmorcrop
revenuemighttranslate
intochangesinfamily
income(inaparDcular
contextorplace)
› Whatcan’twedowithout
addressingthesequesDons?
•  AgreenormaDvetargetsor
benchmarksforfarm
revenue,croprevenue,
farmerearningsperhour…
Closingthoughts:
Weknowhowtocalculatealiving
income.Let’susethisinformaFon.
Whatwedonotknowishowweexpect
agriculturetocontributetoaliving
income.Thisiswherewearestuck.Let’s
firstagreewhyweneedandhowwewill
usetargetsforanythingotherthanfamily
income.
©RSPO
©DrAsrilDarussaminforRSPO
Thanksforlistening…Lookingforwardtoyour
thoughts!
PersonalreflecDonsby
KrisDnKomives,Director,Impacts
CollecDngbaobab©DavidBrazierfortheUnionforEthicalBioTrade