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Minimum wage around the world: how the pandemic has impacted the least paid workers

PicodiJanuary 14, 2021

The Picodi.com team has checked how minimum wage has changed in 2021 throughout several countries and if such a wage can provide a comfortable lifestyle.

How has the pandemic affected the increase of minimum wage in certain countries?

The study included 56 countries where the minimum wage is determined by the government. In some countries, people earning minimum wage are exempt from paying the taxes (the Philippines & Hong Kong). However, in most countries, the gross and net values vary from a few percent to a few dozen. This is why we took into consideration only the net pay which is the money an employee takes home after all deductions.

How have the minimum wages changed in 2021?

1 out of 3 countries included in the study haven’t increased their minimum wage in 2021. Among them there are Hungary, Slovenia, Estonia and the USA, where the federal rate hasn’t changed since 2009.

The highest increase of minimum wage was noted in Ukraine (27% year to year). After converting to the USD, the minimum wage in Ukraine is still one of the lowest ($171).

The Philippines is one of the countries where the pandemic didn’t stop the increase of wages. The minimum wage increased by 3.4% compared to the previous year (₱7,385 to ₱7,139). The Philippines is 28th place among 56 countries included in the study. In New Zealand, the minimum wage increased by 8.1% (12th place) year to year, in South Korea by 1.3% (36th place), and in Taiwan by 0.8% (40th place);

It’s the second year in a row for Kazakhstan to place last in the ranking. Nominal pay in this country did not change, but increasing the health insurance contribution means that employees will take home less money.

Food prices went up

We decided to compare the minimum wage with food prices. The shopping basket created for the purpose of this report consists of eight items: bread, milk, eggs, rice, cheese, meat, fruits and vegetables. Even though this list is short, these products meet the nutritional needs of an adult.

  • Milk (10 litres) – ₱864
  • Bread (10 loaves, 500 g each) – ₱577
  • Rice (1.5 kg) – ₱76
  • Eggs (20 pieces) – ₱147
  • Cheese (1 kg) – ₱296
  • Poultry and beef (6 kg) – ₱1,507
  • Fruits (6 kg) – ₱651
  • Vegetables (8 kg) – ₱670

The total price of basic food products amounts to ₱4,788, which is 7.7% more than in the previous year.

Food prices compared with minimum wages

The basic food makes 64.8% of the minimum net pay. With last year’s prices, the same products made 62.3% of the minimum wage at that time. It means that in the Philippines, the increase in prices outweighs the increase in wages.

How does this affect the least paid workers around the world?

There are just as many different ways to spend money as there are definitions of the comfort of living. Nevertheless, we compared the prices of the same products with the minimum wage in various countries and checked how much of their budget people would have to spend on essential food products.

Ranking of basic food products to minimum wage ratio in various countries

The best ratio of food prices to the minimum wage was noted in the UK, Australia, and Ireland: in these countries, basic food products are worth around 7% of the minimum wage.

In this ranking, the Philippines with the score of 64.8% placed 52nd among 56 countries. Lower in the ranking were Armenia and Kazakhstan.

In some countries, like Nigeria or Uzbekistan, the minimum wage is so low that it doesn’t even cover the costs of the most basic shopping basket.

Methodology and data source

In the report, the latest minimum wages in 2021 were compared with the minimum wages applicable for 2020. Minimum wage rates come from the official government websites. We omitted countries where the minimum wage is negotiated with trade unions and those where there is no nation-wide minimum wage. As for countries where different minimum wage rates apply for various administrative units (Canada, the Philippines, Thailand, Vietnam), we calculated the mean value of all net wages. Net pays were determined with local tax calculators. Net wages were obtained with the help of local salary calculators.

The example of a food basket analysed in the research was created only for statistical purposes only. Amounts stated in the report were calculated based on recommendations of some Ministries of Health regarding minimum nutritional needs. Product prices come from numbeo.com where the data is gathered by internet users from all over the world.

For the conversion to local currencies, we used the average Google Finance rates for the fourth quarter of 2020.

Public Use

Feel free to use all the data and infographics presented in this report for both commercial and non-commercial purposes as long as you indicate the author of the research (Picodi.com) with a link to this subpage. If you have any questions, please contact us: research@picodi.com.