Where to find the world’s best wages

Residents of Swiss financial centre Zurich know that their country has more to offer than world-class chocolate and precision watches. They can now brag that, on the whole, they earn more than anyone in the world. Zurich-dwellers rake in US$22.60 per hour in average net pay, according to a wage survey released Aug. 19. The runner-up city is less than 200 miles southwest: Geneva, where jobs pay US$20.40 per hour.

Though the Swiss cities provide the most cash to workers, they are not the most expensive locales for employers to set up shop. Labourers in glittering Copenhagen command the highest gross pay, at an average of US$32.80 per hour.

Employees in Zurich and Geneva not only take home top dollar, they can buy the most with their earnings. When you factor in local prices, they blow away any other international city in terms of what workers can get for their money.

Working life in Mumbai marks the other end of the spectrum. Because of its US$1.20 average hourly wage, the impoverished urban centre trails the list of 73 cities compiled in the Prices and Earnings report, released by UBS every three years.

Behind The Numbers

UBS arrived at its rankings by studying the wages, taxes and working hours of 14 occupations across 73 world cities. Schoolteachers have a very different lifestyle in Berlin, where they earn an average of US$35,800 per year after taxes, than they do in Bucharest, where the same work nets them only US$4,100. A female factory worker brings in US$18,200 in Chicago, but less than a tenth of that–US$1,800–in Cairo.

To accurately measure each city’s quality of life, the researchers looked not only at gross salaries, but what workers brought home after taxes, based on the number of hours typically worked in their city.

To determine how far citizens could stretch this amount, they then calculated the cost of a generic shopping basket, comprising 154 commonly consumed products and services in each city. The basket was priciest in Oslo, at US$112.

“The prices of goods are higher in Oslo because it’s relatively remote, it’s expensive for companies to operate there, and because taxes are high,” says Robert Helsley, a professor at the University of California, Berkeley’s Haas School of Business.

In Sydney, the same essentials cost a more reasonable US$68.50, but the cheapest goods could be found in two Indian Cities: Delhi and Mumbai, where the shopping basket costs US$37.60 and US$30.90, respectively.

A Parisian can buy 61.3 baskets with their annual net income, but a Peruvian living in Lima can only afford 32.4 with theirs.

To crystallize the meaning of earnings in different countries, the study introduced a contemporary but ubiquitous item to the basked of goods — an iPod Nano. Taking into account pay, taxes and the price of goods, workers in Cairo would have to toil for 105 hours to get their hands on one of the MP3 players, while those in Zurich and New York can pick one up after working for the least amount of time of all the countries surveyed: 9 hours — roughly a day’s work.

Europeans Rake In The Most

The list was crowded with European cities: 14 of the 20 wallet-fattening cities were Western European capitals. All four of the American cities that were included in the analysis made the top 20: New York, Los Angeles, Miami and Chicago. But two other cosmopolitan North American cities, Montreal and Mexico City, didn’t make the cut — in fact, Mexico City was one of the lowest-earning of all those surveyed, beating only Delhi, Manila, Jakarta and Mumbai in wages earned. The top 20 includes one city each from the Asian and Australian continents — Tokyo and Sidney.

The dominance of European cities in the rankings is partly a function of sample: there are more of them on the overall list. But that’s not the only reason. During the earnings periods for which most companies reported — roughly the 2008 calendar year — the dollar depreciated significantly to the Euro.

Switzerland specifically fared well because of its strong financial services sector and small size.

“Industry obviously influences what the overall compensation will be,” says Michael Ryan, chief investment strategist for Swiss bank UBS’ wealth management unit, which produced the report. “Switzerland tends to have very specialized products, and financial services.”

But the tumultuous global economy, whose effect may not be fully reflected in these numbers, may soon knock financial centres like Zurich, Geneva and New York from the top spots. “As we see impact of global financial crisis play out, will that have an emphasis on reordering the list?” says Ryan. “We won’t get that from this data. It’s too fresh.”

Big Pay Packages In Copenhagen, but More Free Cash In Dublin

Even though employers in some cities seemed to offer impressive-looking wages, workers in lower-earning cities often had much more of their cheques left over to play with after taxes and other contributions.

Copenhagen had the biggest disparity between gross and net pay; its workforce contributes 46% of salaries to taxes and social security, shrinking the average paycheque from US$32.80 per hour to US$17.70. Those cashing their paycheques in Munich, Amsterdam, Oslo and Frankfurt give the next-highest chunks of income to the government.

Workers in Dublin, a city offered low tax rates by the European Union because Ireland is classified as a developing country, hold on to the highest portion of their cash of all the cities in the top 20, offering up only 15% of their wages for taxes and social security, followed by Luxembourg and Tokyo, who each pay 18%.

But taxes fund distinct benefits in different parts of the world, so a strict comparison of tax burdens doesn’t give the whole picture.

“Tax systems provide very different public services in different cities. In Copenhagen, I’m assuming health care is included in public tax contributions. In Los Angeles it wouldn’t be,” says Helsley. “Public safety, the quality of the public transportation system, lots of things could be influenced by government spending that would be germane to a person’s choice of place to live.”

There’s no doubt that a sweet compensation package does a great deal to lure workers to any international location. But salary isn’t everything. Employers determining where to locate their businesses and workers deciding where to live must consider a lot more. “Looking at just earnings is deceptive,” says Helsley. “The same person is not going to locate in Mexico and Helsinki.” Just because a city makes the top five, “It doesn’t say it’s the best place to locate a firm, and it certainly doesn’t mean it’s the best place to be a worker.”

Mexico City is the capital city of Mexico It is the economic, industrial, and cultural center in the country, and the most populous city, with about 8,836,045 inhabitants in 2008. Greater Mexico City (Zona Metropolitana del Valle de México) incorporates 59 adjacent municipalities of Mexico State and 29 municipalities of the state of Hidalgo, according to the most recent definition agreed upon by the federal and state governments. Greater Mexico City has a population exceeding 19 million people, making it the second largest metropolitan area in the Americas and the third largest agglomeration in the world. In 2005, it ranked the eighth in terms of GDP (PPP) among urban agglomerations in the world. Mexico City is a major global city in Latin America and ranked 25th among global cities by Foreign Policy’s 2008 Global Cities Index.

According to a study conducted by PricewaterhouseCoopers, Greater Mexico City had a GDP of $315 billion in 2005 at purchasing power parity, an urban agglomeration with the eighth highest GDP in the world after the greater areas of Tokyo, New York, Los Angeles, Chicago, Paris, London and Osaka/Kobe, and the highest in Latin America. In 2020, it is expected to rank seventh with a $608 billion GDP, displacing Osaka/Kobe.

As of 2008, the city had a GDP of about $221 billion, with an income per capita of $25,258, well above the national average and on par with high income economies such as South Korea or the Czech Republic.

Mexico City is located in the Valley of Mexico, also called the Valley of Anáhuac, a large valley in the high plateaus at the center of Mexico, at an altitude of 2,240 meters (7,349 ft). The city was originally built as Tenochtitlan by the Aztecs in 1325 on an island of Lake Texcoco. It was almost completely destroyed in the siege of 1521, and was subsequently redesigned and rebuilt in accordance with the Spanish urban standards. In 1524 the municipality of Mexico City was established, known as México Tenustitlán, and as of 1585 it was officially known as ciudad de México.

From Wikipedia