The concept of living wage and income

While agriculture contributes to one-third of the global GDP, millions engaged in the sector live below the poverty line. One major reason for the aggravating poverty in supply chains is that minimum wages around the world often fail to meet the requirements for a basic quality of life. This led to the need for a ‘remuneration for a standard working week by a worker in a particular place that is sufficient to afford a decent standard of living for the worker and his or her family’, otherwise known as a living wage.

Simply put, the goal of a living wage is to allow a worker to afford a basic but decent standard of living through employment and without government subsidies. A decent standard of living means that you can afford food, water, housing, education, health care, transport, clothing, and other essential needs like provision for unexpected events.

While a living wage concerns achieving a decent standard of living for households, the concept only applies in the context of hired workers, like the ones in factories. But the agricultural sector, especially in low and middle income countries, holds a large number of self-employed and seasonal workers. To make sure that temporary workers and self-employed farmers too, earn a fair wage, the concept of living income was introduced. 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’, a living income takes into account every aspect considered for a living wage, but translated to self-employment.