Estimating Living Wage Globally
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- Guzi, M., Osse, P. (2013). Estimating Living Wage Globally: WageIndicator Presentation 2013. Brno: Masaryk University, Amsterdam: Wage Indicator Foundation, November 2013 (EN)
Summary:
The concept of living wage aims to provide the meaningful comparison of how costly is to lead a decent life across the globe. The calculation of the living wage estimate the monthly income necessary to cover the basic expenses comprising the cost of accommodation, food and public transportation.
How does WageIndicator calculate living wage?
WageIndicator uses the prices posted at Numbeo website to estimate the cost of housing, transportation and food necessary for an individual on monthly basis. In particular the concept of living wage comprises the monthly rent of 1 bedroom apartment outside of centre, public transportation monthly pass and monthly expenses on food per person. To follow the common practice the total costs is topped by 20% to allow for discretionary expenses.
Where the prices come from? What is Numbeo?
The calculation of living wage is based on prices posted at www.numbeo.com as of June 2013. Numbeo is the online database of user-contributed information about the cost of living in cities around the world. From January 2014 WageIndicator will use also data collect via WageIndicator websites in 70 countries.
How does WageIndicator calculate cost of food?
The prices of food assume a personal consumption of 2000 calories per day. The balanced food basket is constructed by Numbeo (e.g. 0.25 liter of milk, 130g of bread, etc.) and the cost of food is estimated on a monthly basis.
How does WageIndicator calculate cost of transportation?
The price of transportation reflects the average regular price of monthly public transportation pass in the country.
What other purchases are included in the living wage?
In addition to the cost of housing, food and transportation, living wage accounts for 20% monthly spending on non-specified discretionary purchases.
Is living wage gross or net?
The concept of living wage represents the amount of expenses in the the given country.
Therefore the living wage should be understood as the concept of net income. WageIndicator performs gross income estimations in the Salary Checks.
Why does WageIndicator present living wage as for a single person?
The living wage is estimated for a single person and provides an easy and straightforward interpretation. In addition the living wage complements the statistics on minimum wage and average wage per occupation provided by WageIndicator jointly in one application, the salary
Check. http://www.wageindicator.org/main/salary/Salarycheckers
Is the wage information in the Salary Check controlled for inflation?
The calculations of living wage are frequently updated to account for the change in prices. Currently the living wage is based on information in 2013.
What is the difference between living wage and minimum wage?
The minimum wage levels are enforced by law. By contrast the concept of living wage is not written in the law and should be perceived as a suggested income level to achieve decent living standards. The definition of decent living standards can vary between countries and individual preferences. In majority of countries the estimated living wage is higher than the minimum wage.
How does living wage relate to the national poverty line?
Definitions of the poverty line may vary considerably among nations and therefore national estimates of poverty line are not comparable. For example, rich nations generally employ more generous standards of poverty than poor nations. The concept of living wage aims to provide a consistent estimate on how costly is to lead a decent life in a given country.