What is a Living Income?
A living income differs from a living wage. While they may sound similar, they are distinct in practice. It's important to first understand what a living income is and how it differs from a living wage.
Living income, i.e., living income benchmark, is defined as the net annual income required for a household in a particular place to afford a decent standard of living for all members of that household. This includes access to food, water, housing, education, healthcare, transport, clothing and other essential needs, as well as provision for unexpected events.
The first step to addressing living income in your supply chain is to create internal alignment and identify your regions of interest to prioritize where to find living income benchmarks. Collaborate with partners to access relevant living income benchmarks and pool financial resources to commission new benchmarks.
Create internal buy-in and alignment
You will likely need to ensure there is a good understanding and strong support for living income within your organization to be able to take your efforts forward in a meaningful way. Identify who is best placed to champion the topic internally within your team or company and how they will enable action. For companies, this can include the C-Suite, sustainability, procurement, marketing, sales and communications teams. For governments, this can include bodies in charge of the sector as well as all relevant ministries of trade, agriculture, environment, natural resources, gender, technology, foreign services and beyond.
Identify high-risk and priority areas
To work on living income, some minimum conditions must be met to start action, including traceability to farming households, trade relationships and direct farmer engagement within your trade relationships. Where these basic conditions are met, it can be useful to identify risks according to supply security by assessing where you produce your largest volumes, consider product quality specifications and where you have the most reliable partners.
Still unsure of where to start? Prioritize and identify where is most important for you to focus your efforts first. The guiding questions and tools below will assist you in this process.
Access Living Income benchmarks
A living income benchmark is an estimate of the cost of a basic and decent standard of living for a household. It answers the question: ‘how much does a typical household in a particular place need to earn, from all income sources, in order to achieve a decent standard of living?’
The living income benchmark will help you calculate the living income gap, and understand how much more the average farming household needs to receive to earn a living income. Benchmarks are produced by multiple organizations and vary in their geographical specificity. If a benchmark does not exist in your priority area, use an alternative benchmark or commission a benchmark study to create one. Be sure to share benchmark data publicly.
If you commission a new benchmark, below are examples of how multiple stakeholders could support your efforts by data sharing, data validation and/or facilitating the process. Multiple stakeholders can also pool financial resources to commission benchmark studies:
- Producing country government: sharing of national, ministry-level and local statistics; data validation;
- Certifiers: commissioned benchmarks, facilitation of farmer engagement;
- Traders and manufacturers: commissioned benchmarks, cost of living data, sustainability project evaluations and facilitation of farmer engagement;
- Buyers: commissioned benchmarks and sustainability project evaluations;
- Farming households and producer groups: living expenses and data validation;
- Donors and multilateral institutions: commissioned benchmarks, sharing cost of living and project evaluation data;
- Academy, researchers and NGOs: primary and secondary data collection and data modelling;
Academy, researchers and NGOs: primary and secondary data collection and data modelling.