Estimating Living Wage Globally

Abstract

In the last decade the living wage concept has received renewed international attention. This paper contributes to the living wage discussion and introduces a method to calculate living wages globally. The proposed approach is innovative in that it uses a cost-of-living app specifically designed to collect the prices of items necessary to calculate the cost of living. The calculated living wage represents the amount of money sufficient to cover food, accommodation, transportation, health and education expenses together with a provision for unexpected expenses. Finally, the living wage is corrected for income taxes and social contributions in order to be comparable to minimum wage and real wage rates expressed as gross earnings. Living wages are estimated for more than 50 countries of which half low and middle-income countries in Africa, Asia and Latin America. The resulting rates are contrasted with the national statutory minimum wages. The calculated living wages are normatively based, and offer an economic yardstick of income adequacy reflecting the needs of workers and their cost of living.

Keywords: living wage, income adequacy, minimum income, decent work