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Manila’s living costs, wages among the lowest
By Eliza Victoria
Philippine Daily Inquirer
First Posted 20:36:00 08/30/2009

Filed Under: Places, Economic Indicators

MANILA, Philippines -- Manila is among the world’s cheapest cities, but is also one of those that pay the lowest hourly wages, according to a study comparing the purchasing power of 73 cities around the globe.

“Prices and Earnings,” a study conducted in March 2009 by the Swiss bank UBS, found that Manila, Kuala Lumpur, Delhi and Mumbai are the world’s least expensive cities based on a standardized basket of 122 goods and services.

The world’s most expensive cities are Oslo, Zurich, Copenhagen, Geneva, Tokyo and New York. However, the study found that employees in Copenhagen, Zurich, Geneva and New York also have the highest gross wages. The two Swiss cities, Zurich and Geneva, top the rankings in terms of net wages.

By contrast, an average employee working in Delhi, Manila, Jakarta and Mumbai takes home less than one-fifteenth of Swiss hourly wages after tax deductions.

To illustrate, workers in Zurich are paid $22.60 per hour ($30.30 gross), while workers in Geneva are paid $20.40 per hour ($29.20 gross)—a far cry from what average workers in Manila are paid: $1.40 per hour ($1.60 gross).

The UBS studies, began in the 1970s and released every three years, are known for illustrating the purchasing power of wages by using “a specific, highly uniform product that is available everywhere with the same quality” instead of an “abstract basket of goods and services.”

The study then calculates how long an employee would have to work to be able to afford this product in each city.
For example, the study determined that employees would have to work "a global average of 37 minutes to earn enough to pay for a Big Mac, 22 minutes for a kilo of rice and 25 minutes for a kilo of bread."

In the Big Mac ranking, Tokyo and North American and Western European countries lead the pack—their workers only have to work 12 to 20 minutes to buy the burger. By contrast, average workers in Nairobi “"need to labor for over 2.5 hours to pay for a Big Mac.”

Workers in Manila have to work an hour 28 minutes to purchase the same product.

For the first time, a nonfood product—the iPod nano—was used in the UBS study to compare working hours and purchasing power.  The study found that an average wage-earner in Zurich and New York could buy this gadget from an Apple store after a mere nine hours at work.  An average Mumbai worker needs to work 20 nine-hour days, or nearly a month, to purchase the same product. A worker in Manila has to work nearly 14 nine-hour days to get that iPod.

In terms of working hours, the UBS study found that employees worked an average of 1,902 hours per year in the 73 surveyed cities. They spent a lot more time in Asian and Middle Eastern cities, averaging 2,119 and 2,063 hours per year respectively.

“Overall, the most hours are worked in Cairo (2,373 hours per year), followed by Seoul (2,312 hours),” the study said.

Global comparison showed that people in the French cities of Lyon and Paris spent the least amount of time at work: 1,582 and 1,594 hours per year respectively.

In North America, a dollar earned in the United States is worth more after deductions than in neighboring Canada.

In Europe, the lowest incomes are paid in Bulgaria (Sofia) and Romania (Bucharest), with wage levels comparable to that of Colombia or Thailand. Bulgaria and Romania joined the European Union in 2007.

London, second among the most expensive cities in the 2006 UBS study, fell nearly 20 places following the devaluation of the pound, landing in the middle among Western European countries.

In Asia, Tokyo is among the world’s costliest cities, but its workers also earn the highest wages on the continent.

Switzerland has been a very employee-friendly country, the UBS study said, with its “extremely high gross wages and comparatively low tax rates.”

“No other city allows workers to take home more income at the end of the month than Zurich and Geneva,” the study said. “Average gross hourly wages (before taxes and social security contributions) can purchase the most in Copenhagen, Zurich and Geneva.”

Data for the “Prices and Earnings” survey was collected by several independent observers in each city. All amounts were converted to US dollars to ensure that the surveyed prices and earnings could be compared. The average exchange rate over the data collection period was used to compensate for exchange rate fluctuations.

UBS is a global financial services company with main headquarters in Switzerland, and offices in the United States, Hong Kong, Singapore, London, and Tokyo.