towards living wages and living incomes:
anker reference values

Photo: Siddarth Selvaraj

why living wages and living incomes matterA decent standard of living – one that covers basic needs
and supports an existence worthy of human dignity – is ahuman right. But Fairtrade’s experience shows clearly that
small-scale farmers and agricultural workers – despite
growing the crops that drive supply chains worth billions on
the global market – too often live in poverty.

Fairtrade is fully committed to Sustainable Development
Goal (SDG) 8 - to promote sustained, inclusive andsustainable economic growth, full and productive
employment and decent work for all. One of the targets of
SDG8 is to achieve full and productive employment anddecent work for all women and men, and equal pay for workof equal value.

A living wage is:

As the concepts of living wages and living incomes havebecome increasingly mainstream, the need for high-quality
estimates for countries around the world has increased
significantly. However, determining how much money afamily needs in order to enjoy a decent standard of living canbe complicated - it varies between regions and countries,and even within the same country. It takes often months tocompile locally relevant data on typical family size, number ofwage earners, the price of food, fuel, housing, education andtransport; payments-in-kind such as subsidised
accommodation; and wage deductions and taxes. To add tothe rigour of the research process, meetings with local
stakeholders, including employers and trade unions,producers and local official, are carried out before an
accurate and legitimate benchmark can be established.

“Remuneration received for a standard
workweek by a worker in a particular placesufficient to afford a decent standard of living
for the worker and her or his family. Elementsof a decent standard of living include food,water, housing, education, health care,transportation, clothing, and other essential
needs including provision for unexpected
events.”- Global Living Wage Coalition
A living income is:“Net annual income required for a household
in a particular place to afford a decent
standard of living for all members of thathousehold.”- Living Income Community of Practiceour vision:

There are more than 1.7 million Fairtrade producers andworkers operating in 73 countries worldwide. Clearly, it
would be prohibitively costly and time-consuming to produce
fully-fledged benchmark studies for every location in every
country. Now, however, Fairtrade - along with other membersof the Global Living Wage Coalition (GLWC) and theLiving Income Community of Practice (LICoP) - haspartnered with the global leaders in living income and living
wage benchmarking, Richard and Martha Anker, to developa faster, cheaper and more scalable way to establish
reference values.

a world in which all producers can enjoy secure, sustainable
livelihoods , fulfil their potential and decide on their future.

Photo: Didier Gentilhomme

measuring gaps and global hot spots
The demand for living wage and living income estimates has
surged in recent years as more and more companies andorganisations recognise the importance of living wages andliving income for sustainability. Fairtrade believes thatmeasuring the gaps between what people receive in returnfor their labour and what they need for a decent standard ofliving is important to trigger action by local actors and alongsupply chains. Still, despite significant achievements by theAnkers and their research network in measuring local values
for decent living, reliable benchmark studies are still lacking
in many places.
Anker reference values are expected to be especially usefulin identifying ‘hot spot’ countries where prevailing wages andincomes are very low compared to the needs of farmers andworkers.
Based on 40 existing Anker studies (11 in Africa, 20 in Asiaand nine in Latin America), the new reference valuescalculate the average living wage and living income for ruraland urban areas within each country, rather than for one
specific location. By analysing past data the reference values
predict how much the net living wage (or take home pay) andliving income for any given developing country should be,
accurate to within a ten percent margin of error.
The new methodology makes it possible to establish
reference values which distinguish between rural and urban
areas - a major improvement on other approaches which aremostly limited to poverty lines and minimum wages. This will
help to significantly increase the number of countries forwhich credible and internationally comparable living wage
and living income estimates are available. Mandatory payroll
deductions and income taxes will be included in theestimated living wage, and the values can easily be updated

our vision:

each year by factoring in inflation, economic development
and changes to income tax levels.
The new reference values are an important next step inFairtrade’s work to measure and improve living wages
and living incomes for small-scale farmers and agricultural
workers around the world. They are not intended to replace
extensively documented benchmark studies for particularlocations - rather, they can provide a global overview of low
income and low wage hotspots, which will then enable
Fairtrade to prioritise action to tackle them.
Reference values enable risk assessments and prioritisation
on a global scale, while full Anker benchmark studies remain
the ‘gold standard’ for highly localised measurement of living
income and living wage.
The first Anker living wage and living income reference
values and country profiles feature Burkina Faso, Ivory
Coast, Peru, and Rwanda. An additional 16 reference values
and country profiles will be released over the remainder of2020.
The Anker Reference Values are endorsed by theGlobal Living Wage Coalition. Development of themethodology was initiated and supported by
Fairtrade International, with the valuable support of
GIZ and others.

For further information and updates, including a full technicalbriefing on the Anker methodology, check out our work on
decent livelihoods.

a world in which all producers can enjoy secure, sustainable
livelihoods , fulfil their potential and decide on their future.