Minimum wages around the world

Picodi

Picodi statement regarding the study „Minimum Wages Around the World”

After receiving comments and clarifications from the National Wages and Productivity Commission regarding the minimum wage in the Philippines, Picodi.com Analysis Team makes this declaration:

In the initial version of the report, the minimum wage used for the Philippines amounted to ₱5,922 (current daily minimum wage rate for Region I Ilocos for Agriculture, Non-Plantation worker and Agriculture 1-9 employees, amounting to ₱282 per day, multiplied by 21, the average number of working days in a month). In the same report, for Canada, Thailand and Vietnam, the mean values of all net wages of various administrative units were calculated. Thank you for pointing out this inaccuracy, for which we sincerely apologize. Below you can find the corrected version of the report.

Summary of amendments:

  • The minimum wage in the Philippines (the mean value of all regional minimum wages in all sectors excluding domestic workers) for 2020 is: ₱7,139 (instead of ₱5,922)
  • In 2019, the mean value of all regional minimum wages was ₱6,920 (instead of ₱5,376)
  • The year to year increase is 3.2 per cent which means the Philippines placed 39th in the ranking of wages increase (instead of 17th)
  • Spending on basic food products in this particular methodology makes 62.3 per cent of the minimum wage (instead of 75.1 per cent)
  • In the ranking of spending on food products, the Philippines placed 51st (instead of 52nd)

We are also aware that the consumption patterns vary between the countries, climates, traditions, cities and even families. The basket consisting of eight categories of products is symbolic and serves only the statistic purposes of this study. It was not our intention to illustrate the actual eating habits in the researched countries but to compare the spending on these particular products.

Minimum wages around the world

Depending on the country, the minimum wage concerns from few to several dozens per cent of the working population. By definition, the minimum wage should protect employees against unduly low earnings.

Picodi.com team has decided to find out if this money is enough to afford the minimum comfort of living, as well as how the minimum wage rates have changed in various countries in 2020.

Upward trend

The study included 54 countries where the national minimum wage exists. It turns out that taxation varies significantly from country to country. For example, in the Philippines and Hong Kong, the minimum wage is exempt from the personal income tax. In other places, the difference in gross and net salary could reach even 40 per cent (Romania). For this comparison to be adequate, we took into consideration net pay, which is the money an employee takes home after all deductions.

How have the minimum wage rates changed in 2020?

In 2020, the highest year to year increase in the minimum wage was noted in Nigeria (64.8 per cent). However, after converting into USD, this amount is still one of the lowest ($74). In some countries, like the US, Spain, South Africa or Latvia, the minimum wage remained unchanged. In Kazakhstan, the minimum wage didn’t change, but the actual amount that a worker gets into his pocket decreased, because of higher health insurance.

The Philippines ranked 39th out of 54 countries included in the report. In 2020, the monthly net pay is 3.2 per cent higher than in the previous year (₱7,139 compared to ₱6,920 for a full-time employee, based on the mean value of minimum wage rates for all regions and sectors). In comparison, the minimum wage increased by 9.1 per cent in Malaysia, 8.7 per cent in Hong Kong, and 1.6 per cent in Thailand.

Basic food products

Just like the previous year, we decided to confront 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 and frugal, these products meet the nutritional needs of an adult and their prices are constantly monitored around the world.

At the beginning of 2020, food prices from the list are as follows:

  • Milk (10 litres) — ₱810.80
  • Bread (10 loaves, 500 g each) — ₱545
  • Rice (1.5 kg) — ₱75
  • Eggs (20) — ₱138
  • Cheese (1 kg) — ₱265
  • Poultry and beef (6 kg) — ₱1,418
  • Fruits (6 kg) — ₱588
  • Vegetables (8 kg) — ₱607

The total price of basic food products amounts to ₱4,447, which is 1.76 per cent more than in the previous year.

What are the prices of basic food products?

The basic shopping basket makes 62.3 per cent of the minimum net pay. With last year’s prices, the same products made 63.1 per cent of the minimum wage at that time. It means that in the Philippines, the increase in wages outran the increase in prices.

Food spending 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 in various countries and checked what part of their budget people would have to spend on essential food products.

Ranking of the food prices to minimum wage ratio in various countries

In this comparison, the Philippines placed 51st. The best ratio of food prices to the minimum wage was noted in Australia, followed by the United Kingdom and Ireland. In these countries, the basic food products are worth around 7 per cent of the minimum wage.

Higher in the ranking was Thailand (47th place), Vietnam (46th place), Malaysia (35th place), or Hong Kong (23rd place).

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

Methodology

In the report, the latest minimum wages were compared with the minimum wages applicable for 2019. 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, Philippines, Vietnam, Thailand), we calculated the mean value of all net wages. Net pays were determined with local tax calculators. 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 2019.

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.