About Global Wage Comparison

Mywage.co.za - Find out what is wage adjusted by PPP, Big Mac wage, Wage Indicator Foundation, Global Wage Comparisons.

The Global Wage Comparisons are based on the earnings of different occupational groups from countries all over the world. Most of these countries have their own national currencies. Wage Indicator presents these earnings as Salary Checks on its national websites in the local currency. In the eurozone these Salary Checks are given in euros.

Purchasing Power Parity

To make earnings comparable between countries you have to ask ourself what the value of a salary or wage is. You can for example express its value in terms of the purchase price of daily necessities: this is what your salary buys you. Your money may be worth more or less in a different country. Normally this is the case. That is because the price of the same commodity will differ in the next country from the price back home. The purchasing power of your salary therefore will vary per country. In order to get a realistic international comparison of purchasing power one has to apply a calculatory trick. That is precisely what Wage Indicator does behind the screen. To make sense of international comparisons we apply the PPP-value to nominal earnings. PPP stands for Purchasing Power Parity. PPP-earnings can be realistically compared acrross borders.

Each country has their own currency and national income-price relations. To get a realistic picture of the purchasing power of a currency, for example as compared to the dollar, you have to put the day-to-day exchange rates out of your mind. They distort the picture. Take country X. Here you might – if you would convert local prices  against the actual exchange rate of the day – buy a decent meal for 2 dollars. That same day these 2 dollars in New York wouldn’t even buy you a cup of coffee. So there is a huge gap between the price levels in X and NY. That’s why you might be able to survive on 500 dollars a month in country X, whereas these would only last you a few days in New York. Even living on hot dogs, donuts and coffee alone! So, in order to survive in New York you need a much higher income than the 500 dollars a month that allow you to survive in country X.

PPP correction

The PPP-correction eliminates this unrealistic distortion from the equation. It relates the purchasing power of currencies - and therefore of your income paid in your local currency – to the national price levels. The PPP-value of your earnings is calculated on the basis of a broad assortment of consumption items, say the price of all your shopping combined. PPP relates your earnings to the value of the commodities and services it buys you in your own country - and not abroad.

The PPP-rates used by Wage Indicator are IMF-estimates. These estimates are regularly updated. Wage Indicator applies the PPP-correction also to all countries in the eurozone. Though all euro-countries use the same currency, their internal income-price relations differ from each other. This makes a PPP-correction necessary if the results of international comparisons between these countries are to be meaningfull, i.e. based on the purchasing power of your earnings in your own country.

Big Mac Wage

The Big Mac Wage expresses an alternative, more “digestive” way for comparing  purchasing power. The Big Mac-purchasing-power-list is published annually by The Economist. It is based on the cost of a Big Mac hamburger in the chain´s restaurants, proclaimed to be of exactly the same size and quality, i.e. the same throughout the world – yet priced differently per country. Please note that the figures do not necessarily reflect the prices in any particular restaurant in any particular country. It does not mean either that Wage Indicator encourages its visitors to eat Big Macs. Big Mac prices used in WageIndicator statistics were collected in January 2012.

 

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