Guzi, M., & Kahanec, M. (2017). Estimating Living Wage Globally. Working Paper for RDW 2017 Conference, WageIndicator Foundation, Amsterdam
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ABSTRACT
In the last decade the concept of living wage has received renewed international attention. This paper contributes to the living wage discussion and introduces a method to calculate living wage globally. The proposed approach is innovative in the way that it uses prices collected through web-surveys in order to provide timely, reasonably accurate and globally comparable estimates. The calculation is based on more than 1,730,000 prices collected since 2014 through the Cost of Living Survey initiated by WageIndicator. The survey is specifically designed to ask web visitors about consumer prices of about 100 goods and services. The estimated living wage represents the amount of money sufficient to cover food expenses, accommodation costs, transportation expenses and other expenses together with a provision for unexpected events. Finally living wage is corrected for income tax, and social contributions to be comparable to minimum wage and real wages which are gross earnings. The living wage is estimated for 54 countries (of which half are low and middle income countries in Africa, Asia and Latin America) and rates are contrasted with the indicators of national poverty line and national statutory minimum wages. Living wage is normatively based and offers an additional metric of economic adequacy that reflects the needs of workers and their cost of living.