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.
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.
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.
Pakistan ranked 8 out of 54 countries included in the report. In 2020, the monthly pay is 16.7 per cent higher than in the previous year (Rs. 15,000 compared to Rs. 17,500). In comparison, the minimum wage increased by 7.8 per cent in India, 7.5 per cent in Russia, and 4.8 per cent in the UK.
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) — Rs. 1,089.10
- Bread (10 loaves, 500 g each) — Rs. 608.70
- Rice (1.5 kg) — Rs. 225.66
- Eggs (20) — Rs. 188.68
- Cheese (1 kg) — Rs. 864.70
- Poultry and beef (6 kg) — Rs. 1,874.87
- Fruits (6 kg) — Rs. 777.04
- Vegetables (8 kg) — Rs. 487.58
The total price of basic food products amounts to Rs. 7,116.33, which is 20.25 per cent more than in the previous year.
The basic shopping basket makes 40.7 per cent of the minimum net pay. With last year’s prices, the same products made 39.5 per cent of the minimum wage at that time. It means that in Pakistan, the increase in prices outran the increase in wages.
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.
In this comparison, Pakistan placed 39th. 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.
Lower in the ranking was Azerbaijan (41st place), Russia (44th place), or India (49th 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.
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, 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.
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