Huge inequality starters’ wages - October 2010

Starters in developed countries earn twice or three times more than those in emerging economies. This is the most dramatic outcome of a comparative analysis of Wage Indicator data from 4,200 respondents in 14 countries, published in October 2010 as Income Gap Starters (pdf, 970 kB). Starters’ earnings are corrected by Purchasing Power Parity (PPP) rates. They therefore allow to realistically compare how many goods and services each wage can purchase.

Some findings however are similar in all economies, regardless of level of development. These are growth potential, effect of education and experience.
The earning perspective of starters is a high income rise during the first half of their working career, after which it flattens (or even decreases in some cases). The economic reward for a tertiary or university degree grows throughout working life. While in the starting period the wage difference between the qualified and the unqualified population is narrow, in the following phases it expands to significant levels. Moreover wages tend to grow with working experience. The explanation may be that workers improve their productivity as they acquire first hand knowledge from experience.

Regarding satisfaction with pay, almost 50 percent of the starters are dissatisfied, 25 percent very much so. Yet, half of the youngsters express satisfaction with their jobs. Finally, there is a positive relation between income and satisfaction with life as-a-whole. The more money, the happier, so it seems.

100,000 Wage Indicator surveys completed up to the first quarter of 2010 were used to select 4,200 respondents aged between 18 and years 25 and grouped according to their country of residence. To avoid sample problems, only the nations that gathered more than 35 responses for those ages and occupations selected were included: Argentina, Belgium, Brazil, Belarus, Colombia, France, Germany, Indonesia, Kazakhstan, Mexico, Netherlands, Spain, United Kingdom and the United States. The most representative occupations were: Advertising and marketing professionals, Shop sales assistants, Receptionists, General office clerks, Cooks, Draughtspersons, Secretaries, Waiters, Applications programmers, Accounting associates professionals, Support technicians, and Statistical, finance and insurance clerks. One occupation clearly stands out as the most unprofitable overall. Cooks during their careers will not even manage to double their earnings throughout their careers.

Download the full report: Income Gap Starters (pdf 970 kB)

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