Livelihood

What Is Livelihood?

Livelihood refers to a person's "means of securing the basic necessities of life." It encompasses the capabilities, assets, and activities required to make a living, ensuring the satisfaction of fundamental needs for an individual and their household, such as food, water, shelter, and clothing. This concept extends beyond mere income or employment, delving into the broader economic security and social well-being of individuals and communities within the framework of development economics. A secure livelihood implies not only present access to resources but also the ability to cope with and recover from financial shocks and stresses.

History and Origin

The concept of livelihood, particularly "sustainable livelihood," gained prominence in development discourse to offer a more holistic approach to poverty eradication. It was first introduced by the Brundtland Commission on Environment and Development, and further expanded upon at the 1992 United Nations Conference on Environment and Development, which advocated for achieving sustainable livelihoods as a broad goal for combating poverty. Historically, discussions around poverty often narrowly focused on aspects like low income. However, a broader understanding emerged, recognizing that factors such as vulnerability and social exclusion significantly impact a person's ability to earn a living sustainably. Organizations like CARE, for instance, developed a Household Livelihood Security framework in 1994, moving away from a purely sectoral approach to development and embracing more holistic techniques. Research also highlights the historical continuity of livelihood strategies, including diversification of resource use and the development of social networks, for building resilience against socio-environmental insecurity.¹⁹

Key Takeaways

• Livelihood encompasses all means by which an individual or household secures the basic necessities of life, including income, assets, and activities.
• It is a core concept in development economics, emphasizing not just income but also broader economic, social, and environmental well-being.
• A sustainable livelihood allows individuals and communities to cope with and recover from shocks, maintain or enhance their capabilities and assets, and provide opportunities for future generations.
• Livelihood security is closely tied to access to resources, the ability to offset risks, and the capacity to meet contingencies.
• The concept highlights the interconnectedness of various factors, such as health, agriculture, and social networks, in ensuring a stable means of living.

Interpreting the Livelihood

Interpreting livelihood involves assessing the various dimensions that contribute to an individual's or household's ability to secure their basic needs over time. It goes beyond simply analyzing a person's current income or employment status. Instead, it considers the overall resilience and adaptability of a livelihood strategy. For example, a diverse set of income-generating activities, access to social safety nets, and community support systems all contribute to livelihood security. The strength of a livelihood is often evaluated by its capacity to withstand unexpected events, such as economic downturns or natural disasters, without leading to destitution. Understanding the components of a livelihood allows for a more nuanced approach to development and aid, focusing on building long-term capacity rather than just providing immediate relief. This perspective is crucial in areas prone to economic instability or where traditional forms of employment are scarce.

Hypothetical Example

Consider Maria, a small-scale farmer in a rural community. Her livelihood is primarily based on cultivating crops for consumption and sale. In a good year, her farm yields enough produce to feed her family and sell the surplus for cash, allowing her to purchase other necessities and invest in her farm. This represents a secure livelihood.

However, a hypothetical drought occurs, severely impacting her harvest. If Maria has diversified her livelihood, for instance, by also engaging in craft-making during the dry season or by having savings (an asset) from previous good harvests, she might still be able to meet her family's basic needs. This demonstrates the resilience of her livelihood. If she lacks such diversification or assets, the drought could lead to livelihood insecurity, forcing her to sell crucial resources or borrow at high interest rates, impacting her long-term financial health and highlighting the importance of risk management in agricultural communities.

Practical Applications

The concept of livelihood has significant practical applications across various fields, including international development, public policy, and even microfinance. In development, understanding livelihoods helps design interventions that are truly sustainable and effective in poverty reduction. For example, programs might focus on strengthening human capital through education and skills training, improving access to financial resources like credit and savings, or promoting diversification of income streams.

Policymakers at national and international levels utilize livelihood frameworks to address vulnerability and build resilience. The Organisation for Economic Co-operation and Development (OECD), for instance, has emphasized supporting livelihoods during crises, such as the COVID-19 pandemic, by examining measures like cash transfer schemes and direct support for those struggling to meet expenses.¹⁷, ¹⁸ Furthermore, discussions around labor market policies often consider how to ensure decent work and support the livelihoods of workers, recognizing the importance of wage-setting mechanisms and wage protection policies to reduce inequalities.¹⁶ Even central banks, like the Federal Reserve, monitor the state of the labor market and economic conditions, recognizing their impact on households' ability to meet expenses and secure their livelihoods.¹⁴, ¹⁵ Recent reports from the Federal Reserve indicate that a weakening job market and slowing economic growth could pose risks to the livelihoods of vulnerable workers, emphasizing the need for targeted support and policies that address structural barriers to employment.⁹, ¹⁰, ¹¹, ¹², ¹³

Limitations and Criticisms

While the livelihood framework offers a comprehensive view of well-being and poverty, it is not without limitations. Critics sometimes point to the complexity of measuring and quantifying all the interconnected aspects of a livelihood. The qualitative nature of some components, such as social networks or dignity, can make direct comparisons and impact assessments challenging. There's also a risk that a broad focus on livelihood can sometimes dilute the specific attention needed for particular issues, such as income inequality or access to specific services like healthcare.

Another criticism revolves around the potential for interventions based on livelihood frameworks to become overly academic or detached from the immediate, urgent needs of vulnerable populations if not implemented with strong community engagement. The emphasis on long-term sustainability, while crucial, might sometimes overshadow the critical need for immediate poverty alleviation in crisis situations. Furthermore, external shocks, such as global recessions or rapid technological changes, can fundamentally alter the landscape of livelihoods, making static frameworks difficult to apply. For instance, the vulnerability of workers in the modern labor market due to automation or economic shifts highlights the dynamic nature of livelihood challenges.⁷, ⁸

Livelihood vs. Income

Livelihood and income are related but distinct concepts. Income refers specifically to the money or other financial compensation received in exchange for labor or services, from investments, or from other sources. It is a quantifiable monetary flow. In contrast, livelihood is a much broader term that encompasses all the means and activities by which individuals and households secure their basic needs and sustain their way of life. While income is a critical component of most livelihoods, a livelihood can also include non-monetary elements, such as access to natural resources, social support networks, skills, and community services. For example, a subsistence farmer may have very little cash income, but their livelihood is secured through their ability to grow food, access clean water, and participate in a reciprocal community. This holistic view distinguishes livelihood from the narrower focus on disposable income alone.

FAQs

What are the key components of a livelihood?

The key components of a livelihood typically include human capital (skills, knowledge, health), natural capital (land, water, biodiversity), financial capital (savings, credit, remittances), physical capital (tools, infrastructure), and social capital (networks, relationships, trust). These elements interact to form a person's means of living.⁵, ⁶

How does climate change impact livelihoods?

Climate change can significantly impact livelihoods, especially those dependent on natural resources like agriculture or fishing. It can lead to unpredictable weather patterns, droughts, floods, and resource scarcity, directly threatening food security and income generation. This often forces communities to adapt their economic activities or even migrate.⁴

What is livelihood security?

Livelihood security refers to the ability of individuals and communities to secure a sustainable means of living, ensuring ongoing economic and social well-being.³ It means having adequate and sustainable access to income and resources to meet basic needs, including food, water, health, and education.²

Why is diversification important for livelihood?

Diversification is crucial for livelihood because it reduces vulnerability to shocks. By engaging in multiple income-generating activities or having diverse sources of assets, individuals and households can better cope with unexpected events, such as crop failures, job losses, or market fluctuations. This strategy enhances resilience and promotes long-term stability.

What is the role of government in supporting livelihoods?

Governments play a vital role in supporting livelihoods through various policies and programs. This can include establishing social safety nets, promoting job creation, providing education and healthcare, investing in infrastructure, and implementing regulations that protect workers and resources. Their actions aim to create an enabling environment for individuals to secure and improve their livelihoods.¹