Why are ‘self-generated livelihoods’ on the increase?

Technological, demographic, and environmental shifts are leading to fewer opportunities to earn a steady salary, increasing the need to “self-generate” livelihoods and threatening to greatly increase inequality. We need innovation in our social institutions to ensure that everyone has a secure base and equal opportunity to live a meaningful life.

A livelihood is more than just a job. It is how an individual gets access to that portion of everything produced by society that they need to survive and realize their potential. Changes in the concept of livelihoods are emerging from a convergence of upheavals in technology, demography, environment and evolution.

First, technological advances have brought the collapse of time and distance. A shift towards knowledge-intensive activities, an avalanche of data and information, and greater interconnection among individuals and institutions throughout the world have changed how humans interact with each other, and with their past, present and future.

Second, demographic shifts have altered the demand and supply of goods and services in highly skewed ways. Ageing populations and a decline in fertility rates in the richer parts of the world, together with high population growth and migration elsewhere, have changed the pattern of human needs and the possibilities to satisfy them.

Third, environmental constraints are placing limits on human activities that impinge on the regenerative capacity of life-supporting ecosystems. Climate change, biodiversity loss and pollution are creating a new, and possibly more hostile, biophysical context for humanity. Finally, biological evolution can now, at least in principle, be consciously directed, a possibility previously confined to cultural evolution. Genetic modifications and artificial augmentation devices could significantly enhance human capabilities – but only for those who can afford them, with differing access potentially causing a great increase in inequality.

The historically recent reliance on a permanent “job” or being “employed” by a private or public institution, is to fade away as “self-generated” livelihoods become the global norm once again.

Until two centuries ago, the notion of a steady, salaried job barely existed – through history most people had to create their own livelihoods. Although by the mid-20th century a job became a reality for many in rich countries, in poorer parts of the world most people remained “self-employed”, usually in agriculture or the informal sector, and often involving some form of self-exploitation or exploitation of kin.

Large and medium size firms and government agencies will provide formal employment for only a minority of workers in most developing regions. In Latin America, half the labour force works in the informal sector where most workers create their own jobs, either as micro-entrepreneurs or in subsistence activities. Research indicates that self-employment has emerged as the dominant form of informality, presumably because of independence, flexible hours, job training opportunities, tax avoidance and freedom from regulation.[1] It has also been found that t between 40% and 65% of self-employed workers in low and middle-income countries are successful or potentially successful (defined as those who employ others or belong to a non-poor household), and that their number grows rapidly with increases in average income per capita.[2]

Steady jobs are now also fading in the richer parts of the world. Trends point towards displacement by automation, more frequent career changes and part-time jobs, with a growing proportion of individual or small-group entrepreneurs among the younger generations as the “zero marginal cost” and “sharing” economy increases the possibilities for “self-generated” livelihoods. Exceedingly large undertakings and investments are required to provide the underlying products and services that make these interactions and entrepreneurial explosions possible. Rapidly growing multi-billion information and communications technology corporations provide hardware, software and infrastructure.

Yet, even here, steady salaries and career paths are giving way to job rotation, intermittent employment and part-time and dual appointments.

As steady jobs fade, how should we pay for pensions and healthcare? How can education systems give adults continuous opportunities to learn new skills? How do we generate fair opportunities for everyone to design and realize their own life projects?

Innovations in social institutions are needed to address the paradox that we live in a world of potential abundance, but one in which growing numbers of people do not have a secure base from which to flourish.

Current institutional arrangements are concentrating the means to live meaningful lives in a small group – increasingly, only those with significant capital assets or advanced knowledge will have the relative security of independent income or steady jobs; for everyone else, the uncertainty of self-employment will be compounded by rapidly shifting demands, unequal access to the fruits of technical progress and the declining regenerative capacity of life-supporting ecosystems.

The provision of social protection and services could be decoupled from having a steady job. Basic levels of education, health, transport and even housing, and a minimum pension should be available to all, regardless of their employment situation or history. Moreover, a decades-old pioneering work suggested that in developing countries it is possible to provide basic services (primary education, preventive medicine, child care, vaccinations, nutrition programs, farm extension services, reforestation, maintenance of small infrastructure projects, sanitation facilities, public hygiene, skills training) at low cost because their productivity does not depend primarily on wage levels or fixed investments.[3] At that time, coordination, management, training and administration problems appeared insurmountable, but advances in information technology coupled with institutional innovations could easily overcome them.

Institutional innovations could also include new wealth and income redistribution schemes to equalize opportunity; technical, management, information and financial support for self-generated livelihoods; alternative currency schemes based on the allocation of time; and initiatives to promote creative industries that take advantage of the new realms of human faculties that cyberspace and virtual reality have created. Guaranteeing a minimum income for everyone is one idea that would be seen in a new light if priorities shift from incentivizing work to creating a secure base for human flourishing.

The nature of debates about poverty, inequality and livelihoods may change radically if they come to be seen as being fundamentally about how to improve people’s capacity to lead meaningful lives. This would transform an old Latin American adage from “work to live, don’t live to work,” into “work to live and flourish, don’t just live to work and wilt.”

Originally Published in “Global Strategic Foresight Community of the World Economic Forum for the Annual Meeting 2015”

[1] Biles, James J., “Informal Work in Latin America: Competing Perspectives and Recent Debates,” Geography Compass, 3/1 (2009), pp. 214-236. [2] Gindling, T. H. and David Newhouse, “Self-Employment in the Developing World,” World Development, Vol 56, (2014), pp. 313-331. [3] Sachs, Ignacy, “A Welfare State for Poor Countries”, Economic and Political Weekly, Vol. 6, Issue No. 3-4-5-, January 16, 1971. The examples of the Indian state of Kerala and of Cuba show it is possible to have high levels of social development with modest income per capita.

About the Author

Dr. Francisco Sagasti, PhD, is a Peruvian engineer, academic, and author, who served as the President of Peru between November 17, 2020 and July 28th, 2021. Dr. Sagasti has worked as an advisor for economic development at the International Development Research Centre, World Bank, UNCSTD and the World Economic Forum. After the 1992 Peruvian constitutional crisis, Sagasti left his position at the World Bank to return to Peru. In 2016, he helped found the centrist Purple Party with Julio Guzmán.Following the dissolution of congress in 2019, he was elected into congress in January 2020, serving from March to November 2020 as a Member of Congress, representing the Lima constituency.

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