Living incomes and living wages

Around 632 million people still lived in extreme poverty (below USD 1.90 per day) in 2019. Particularly affected are people in rural areas of Africa, Asia and Latin America who work in agriculture. Income and wages earned in agriculture are usually so low that many smallholder families and workers are unable to invest in their farms, education or a healthy diet, despite working hard in the fields. They are denied a life in dignity. 

Only through living income and wage can extreme poverty and resulting child labor be combated in the long term. What is more, higher incomes increase the attractiveness of the agricultural sector and secure our future global supply of raw materials.  

Living income and wage - a fundamental human right

A living income is 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. Elements of a decent standard of living include: food, water, housing, education, healthcare, transport, clothing, and other essential needs including provision for unexpected events.“

A living wage is the remuneration received for a standard workweek by a worker in a particular place sufficient to afford a decent standard of living for the worker and her or his family.

Living income and wage are a fundamental human right. Article 25.1 of the 1948 United Nations Universal Declaration of Human Rights states,  

„Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control.“

Unfortunately, most smallholder farmers in agricultural value chains neither earn a living income, nor are they able to pay a living wage to the workers they employ. 

Therefore, INA commits to securing the human right to living income and wage and realizing them along global supply chains. To achieve this, governments, companies, producers and civil society must work together. 

Video "Why working together is the way to a living income"

Every working smallholder farmer in every corner of the world deserves to earn a living income. This is an income that does more than simply lift growers and their families above the poverty line. Instead, it should ensure that everyone in their household can enjoy a decent standard of living.

How companies and governments can take action

Raw material prices for agricultural products such as cocoa or coffee are often so low that smallholder families can not even cover their production costs. Often, there is no direct and long-term relationship with the producers, but long and intransparent supply chains that aren’t traceable. To improve the situation of smallholder families at the beginning of the supply chain and to sustainably secure supply of raw materials, companies and governments need to know local production conditions and introduce supportive measures for good agricultural practices and improved working conditions. In addition, companies can introduce responsible purchasing practices by anchoring long-term contracts with producers, fair payment conditions and, above all, fair prices into their procurement practices. 

To contribute to a fair pricing policy, INA has developed the GIZ Living Wage Costing Tool as a practical tool. It helps users answer the question, "How much do I need to pay to achieve a living wage?" by identifying the incremental costs of paying living wage at the farm level.  

Activities in forums and groups

The Living Income Community of Practice is an international working group with more than 1600 supporters from the private and public sectors, as well as civil society, standard-setting organizations, science and consulting services. The overall objective of the working group is to promote the implementation of living income in global agricultural supply chains. In addition to the exchange, it offers information and ressources on the topic, and guidance on first steps, e.g., the Living Income Toolkit for companies as well as the Living Income Guidance for governments. 

The German Retailers Working Group actively works towards developing and implementing responsible business practices in its members’ global supply chains. In forming this alliance the German retailers hope to use their significant leverage to exert a positive influence on producing and processing companies within their supply chains, thereby helping smallholders and workers around the world to achieve an appropriate standard of living from farming agricultural raw materials such as coffee, cocoa, cotton or bananas. 

The ALIGN guidance tool includes an interactive world map with information on commodity production, wage structures and income situation of different countries, and provides an action process to support agri-food companies in implementing living income and wage in their supply chains.  

Through its activities, INA supports companies to seriously pursue this approach. The objective is to make global trade fairer to all and lift smallholder farmers out of poverty.