McKinsey & Company just released a fascinating research report, “India’s Path from Poverty to Empowerment“. In it, the McKinsey Global Institute presents a new concept that it calls the Empowerment Line.
Where the poverty line is defined as ‘the estimated minimum level of income needed to secure the necessities of life‘, the Empowerment Line is defined by McKinsey as
… an analytical framework that determines the level of consumption required to fulfill eight basic needs—food, energy, housing, drinking water, sanitation, health care, education, and social security—at a level sufficient to achieve a decent standard of living rather than bare subsistence.
It’s essentially the difference between surviving, and thriving.
|Living at the Poverty Line||Living at the Empowerment Line|
|Eating enough calories to survive||Eating nutritious food to stay healthy|
|Having water||Having clean water, consistently|
|Can access care for life-threatening issues||Can access care to prevent disease|
|Able to have power and electricity||Consistently have power and electricity|
|Toilet facilities||Can use disposal facilities for trash and human waste|
|Limited access to basic education||Access to education and learning opportunities|
|Basic shelter||Comfortable housing|
|No social service||Social security and service|
More officially, it means access to eight basic services that contribute to a minimum acceptable standard of living, as shown and defined in this chart from the McKinsey report
One of the clear takeaways in this report is that solving poverty for those currently living in it is actually a much bigger project then originally anticipated.
Research shows that people need to not only move to the poverty line, but to make two-three times as much as they currently are to officially break the cycle of poverty and be “Empowered”. The cost of achieving this, at least in India, “is seven times higher than the cost of eliminating poverty as defined by the government”.
So how can people move to (and beyond) the Empowerment Line?
The research from McKinsey shares 4 key priorities, leading with “Accelerating job creation”
INVESTMENT IN ‘JOB-CREATION ENGINES’ CAN PROMOTE MORE GEOGRAPHICALLY BALANCED GROWTH AND BE SELF-SUSTAINING
As the World Economic Forum and ANDE reported, one of the keys to job creation is not just capital, but also talent. This report further highlights that “A lack of skills contributes to low workforce productivity“.
Other priorities include
- Raising farm productivity
- Increasing public spending on basic services
- Making basic services more effective
However, it is very possible to move large amounts of people into better living standards. The research shares that in the last 30 years, over 700 million people were lifted out of extreme poverty, 527 million in the past decade; in other words, the “pace of improvement has been accelerating”.
What others measures are there to monitor progress?
The Empowerment Line is by no means the new and improved measure that will become the new guide for global development organizations. The most popular measure remains the Millennium Development Goals published by the United Nations.
The OECD, World Bank, Gates Foundation, governments, and many more also have their own measurement systems. While all report on great challenges, all also report on progress. Most recently, in the 2014 Gates Foundation Annual Report, Bill Gates shared how its data is dispelling myths in global development – Myth one: Poor countries are doomed to stay poor…
By almost any measure, the world is better than it has ever been. People are living longer, healthier lives. Many nations that were aid recipients are now self-sufficient. You might think that such striking progress would be widely celebrated, but in fact, Melinda and I are struck by how many people think the world is getting worse. The belief that the world can’t solve extreme poverty and disease isn’t just mistaken. It is harmful.
It’s my belief that this new measure, the Empowerment Line, is especially significant because it helps shift our focus to a longer-term objective, not just helping people live, but helping them thrive.
While another measurement system might cause some to roll their eyes, I look forward to the day when we can no longer talk about how to ensure everyone has access to clean water or proper sanitation, and can instead focus on how to improve access to better education and better jobs.