MEASURING LIVING INCOME
There are a number of methodologies that can be used to calculate or approximate a living income and or living income benchmarks. The Living Income Community of Practices however, endorses one particularly robust, yet cost-effective methodology which is discussed below:
The Anker Methodology
Originally developed by Richard and Martha Anker (2017) for calculating a living wage, the Anker methodology has gained widespread acceptance, being used to estimate living wages, and more recently living incomes, in areas around the world. The methodology has been applied and championed by the Global Living Wage Coalition and a number of other organisations, and is endorsed by the Living Income Community of Practice. It has been instrumental in the establishment of the living income concept and is currently being used to pilot the calculation of living incomes in the cocoa sectors of Cote D'Ivoire and Ghana.
This mixed methods methodology stipulates that to calculate a living wage or living income, one must first identify what it would cost for a household to afford a decent standard of living. In the case of living income, this decent living cost can then be used as a living income benchmark. This is because if a household is collectively earning an income the same or greater than what it would cost to live decently, then one can assume that they are, in fact, earning a living income. Click here for guidance on using the Anker Living Wage methodology for calculating Living Incomes.
Click this image to read more on the methodology.
For calculating the cost of a decent standard of living the methodology details costing approaches for the following areas:
Decent food - Local market surveys, model diets and secondary data
Decent Housing - Rental costs, building costs, contextual and international housing standards & secondary data.
Non-food non-housing (such school and clothing) - Focus groups and secondary data.
Margin for unforeseen events - Additional percentage dependent on the context.
Above: A presentation by Dr. Kristin Komives on calculating the cost of a decent standard of living for living income.
All of these are costed with the consideration of international decency standards (e.g WHO, ILO and UNHabitat). The local context is also considered however, bearing in mind that local definitions of decency may vary geographically. This makes the decency standards normative.
The living income CoP would like to support the correct use and uptake of the Anker methodology. This robust and cost-effective methodology for calculating the cost of a decent standard of living is also unique regarding the transparency that underpins it. The LI CoP is going to provide resources to enable organisations to use the approach consistently, making it easier and faster for people to apply rigorously.
NOTE: When calculating LIVING INCOME, one should only use the decency costing components of the methodology, making small, relevant adjustments for the INCOME context. Other facets of the methodology (e.g. working hours) are only relevant in the wage context.
CLICK HERE to learn more about the considerations for using the Anker Living Wage Methodology for benchmarking Living Income through a guidance document which was produced with the generous support of Richard and Martha Anker
There are also other methodologies available for calculating or approximating living income including the use of existing poverty lines. Click here to learn more about adjusting poverty lines.