Worldwide Wage Report

Minimum wages are designed to maintain a fair relationship between employers and employees. Minimum wage is an amount that is set by the law, rather than individual wages for different roles at different companies. The living wage is defined as an income that is determined by the average cost to live, for example, in the UK the living wage is almost a whole £1 more per hour than the minimum wage.

Workers in countries with a higher minimum wage compared to the cost of living should have a higher income. But, where in the world is the best wage in comparison to the living costs and how have they changed over the years?

Our personal finance experts have looked into the minimum wages and living costs around the globe to create the worldwide wage report. The happiest countries in the world have also been identified to explore the correlation between minimum wages and happiness. 

Minimum wage compared to cost of living

The relationship between minimum wage and the cost of living is incredibly important. If there is an imbalance between the two then poverty could become much more commonplace. 

The average disposable income was calculated by subtracting the average cost of living from the minimum wage of each country to discover how much disposable income people in each country have per month.

Currently, the majority of countries have a lower minimum wage than the cost of living, and therefore, citizens earning the lowest wage in 58.6% of nations are losing money every month. The average amount of disposable income is -£93.76.

Top three countries with the highest monthly disposable income

1. France

Average Cost of Living: £1,198.26

Monthly minimum Wage: £1,537.56

Average Disposable Income: £339.30

French citizens on minimum wage have the highest disposable income of any nation, with an average of £339.30 a month after the cost of living is subtracted. The monthly minimum wage in France is the third highest in the world at just over £1,500 per month, meanwhile, their average cost of living is only the 12th highest. 

2. Turkey

Average Cost of Living: £460.03

Monthy minimum Wage: £768.78

Average Disposable Income: £308.75

While the Turkish minimum wage is in the top 10 lowest of those ranked, Turks still have the second highest level of average monthly disposable income. This is because the average cost of living in Turkey is incredibly low at £460.03, which is £581.56 less than the average amount across all the nations. 

3. Poland

Average Cost of Living: £833.65

Monthly minimum Wage: £1,008.24

Average Disposable Income: £174.59

Poland has the third highest level of average monthly disposable income for its minimum wage workers at £174.59, although this is far below the two above it Poles are still some of the best off when earning minimum wage.

Top three countries with the lowest monthly disposable income

1. United States

Average Cost of Living: £1,557.65

Monthly minimum Wage: £920.01

Average Disposable Income: -£637.63

At the other end of the scale is the USA, Americans lose out on a massive £637.63 every month on average when they are earning minimum wage. In the US tipping is much more commonplace, and it is needed to supplement the low wages offered in the land of the free.

2. Israel

Average Cost of Living: £1,481.33

Monthly minimum Wage: £857

Average Disposable Income: -£624.33

Israel has the second biggest deficit when it comes to disposable income each month, workers on minimum wage only earn £857 in the country. This is significantly low when compared to the average cost of living per month which stands at just under £1,500. 

3. Slovakia

Average Cost of Living: £825.24

Monthly minimum Wage: £403.29

Average Disposable Income: -£421.94

The European nation with the biggest disparity between their minimum wage and cost of living is Slovakia where minimum wage workers lose out on £421.94 every month. This is due to a cost of living that is almost double the minimum wage. 

The OECD countries with the highest minimum wage

1. Australia, minimum wage of £9.38 per hour:

The Australian minimum wage of £9.38 is currently the highest of any OECD country, even better news for the Aussies is that this wage is £3.91 higher than the average minimum wage of £5.47 per hour. The Australian minimum wage has grown by 11.21% since 2011 and this has taken them from the third-highest to the highest minimum wage. 

2. Luxembourg, minimum wage of £9.16 per hour:

Luxembourg and Australia have very similar minimum wages with just 18p per hour separating them. Ten years ago, Luxembourg had the highest minimum wage but has since been overtaken in the past decade due to the country seeing just a 5% growth. Residents of Luxembourg are the second happiest people with a score of 7.4/10, as well as having the second highest minimum wage.

3. France, minimum wage of £8.87 per hour:

France ranks in third place for minimum wage amongst OECD countries, as French workers have a high minimum wage of just under £8.87. This is £3.40 more than the OECD minimum wage average and 51p less than the Australian value. 

The OECD countries with the lowest minimum wage 

1. Mexico, minimum wage of £1.02 per hour:

The Mexican minimum wage of £1.02 is the lowest of all OECD countries, this amount is £4.45 less than the OECD average minimum wage, and £8.36 less than Australia. 

2. Brazil, minimum wage of £1.60 per hour:

Brazil has the second lowest minimum wage at £1.60 per hour. Although this means that Brazilian workers earn 58p more per hour than their Mexican counterparts; they are still far below the OECD average of £5.47.

3. Russia, minimum wage of £1.89 per hour:

Russian workers earn the lowest minimum wage of any European nation analysed, and the third lowest amount of all the OECD countries. The Russian wage is £3.58 lower than the global average.

The countries with the biggest increase in minimum wage over a decade 

By looking at the difference between the minimum wage today and that of 10 years ago the research reveals which nations have had the biggest increase in minimum wages for their workers. 

1. Lithuania, 103.3% 10-year minimum wage increase:

The Baltic state of Lithuania is the only country in the world that has doubled its minimum wage over 10 years. In total, the country has seen a 103.3% increase from £2.40 to £4.87, despite its increase, Lithuania ranks in 17th place for highest minimum wages in 2020. 

2. South Korea, 81.63% 10-year minimum wage increase:

From Europe to Asia, South Korea has seen the second-highest increase in minimum wage in the past 10 years at just under 82%. This increase is 54% higher than the average around the world.

3. Hungary, 76.47% 10-year minimum wage increase:

The second European nation with one of the highest minimum wage increases is Hungary, where there was an increase of just over three-quarters of its 2011 minimum wage of £2.47. Hungarian citizens now earn well over £4 if they are on the national minimum wage. 

The countries with the biggest decrease in minimum wage over a decade

Although the majority of the countries analysed have had an increase in their minimum wage over the past 10 years, workers in three countries were unlucky enough to see their minimum wage decrease during this time.

1. United States, 15.12% 10-year minimum wage decrease:

The USA has seen the biggest drop in minimum wage value over the past decade, with a 15.12% drop. In 2010 the American minimum wage sat at £6.25 (the 9th highest in the world), but it has now dropped to £5.31 per hour. 

2. Greece, 12.12% 10-year minimum wage decrease:

The second-biggest decrease in minimum wage occurred in the Mediterranean state of Greece. 10 years ago the Greek minimum wage was set at £4.80 per hour, but this has decreased by 12.12% over 10 years, the minimum wage is £4.22.

3. Belgium, 0.88% 10-year minimum wage decrease:

The drop in Belgium’s minimum wage value is nowhere near as drastic as in Greece or the USA, but it has decreased nonetheless. The current minimum wage is £8.14, which is 8p lower than it was a decade earlier. Despite this, the 2020 amount is still the 6th highest in the world.

Top three countries with the highest cost of living increase

The cost of living from the World Bank is shown using a consumer price index, comparing the cost of living in each year against the 2010 cost, which is set at a score of 100.

1. Turkey, 163.22% 10-year increase in cost of living

The 10-year increase in the cost of living across Turkey is ginormous, with over 163% higher costs in 2020 than in 2010. The average increase was only 27.3% so this rise is astronomical in comparison. 

2. Russia, 86.68% 10-year increase in cost of living

Living costs in Russia have increased significantly in the last decade according to the World Bank, in total Russian costs have increased by just under 87%. Although this is high it is still significantly less than the Turkish increase, in fact, it is over 75% more of an increase. This increase could be a factor in Russia achieving the second-lowest happiness score of 5.5, again only Turkey had a lower score.

3. Brazil, 72.77% 10-year increase in cost of living 

From the most recent World Cup host to their predecessor, Brazil was hit badly financially by the miscalculations of hosting a World Cup and Olympics in two years. During this same time frame, the cost of living has increased massively by almost 73%. 

Top three countries with the lowest cost of living increase

1. Greece, 0.68% 10-year increase in cost of living:

Greece saw the smallest increase in the cost of living with an overall percentage increase of 0.68% over the past 10 years, almost 27% more than the average global cost of living increase. However, it is offset by the decrease in the minimum wage experienced by Greek workers during the same time period.

2. Japan, 5.47% 10-year increase in cost of living:

Japan had the second-lowest increase in the cost of living since 2010, with costs only increasing by 5.47%. Although this increase was almost 5% higher than Greece, it was still low enough for the second spot in the rankings.

3. Ireland, 6.23% 10-year increase in cost of living:

Ireland’s increase of 6.23% is the third-lowest in the world, and 21.07% less than the average cost of living increase. Moreover, their costs increased by around 14% less than their geographical neighbour, the UK.