Wage gap comparisons for selected economies

  • Since 2008 Japan began to experience a strong revaluation of the yen with little increase in the PPP cost of living. This enabled Japan to record in 2009 its best living wage equalisation level ever (15% living-wage gap). In contrast, since 2007, most countries experienced substantial currency devaluations, strong PPP growth or real wage increases below the growth of U.S. wages. Thus, except for Italy and Hong Kong, which managed to sustain their previous equalisation, all the other countries increased their hourly compensation costs gaps with the U.S. in 2009.
  • Always relative to 2007, South Korea, the UK and Mexico experienced strong devaluations of their currencies in 2009 and meaningful decreases in their PPP costs of living, but devaluations were deep enough to offset all other factors and, consequently, increase their wage gaps. Canada performed worse for it was the only country in this assessment with a decrease in nominal wages in domestic currency. In this way, its equalisation index not only dropped substantially, but –after decades of equalisation surpluses– generated a gap with equivalent U.S. wages that had not existed since the late 1980s. The four countries recorded the worst performance of the twelve economies in this analysis, with Mexico getting close to its nadir (1995).
  • In the Euro Area real wages have barely moved since 2007. Thus, Germany, France and Spain lose some ground in their equalisation trends. Only Italy managed to increase real wages enough to maintain its previous equalisation index.
  • Brazil experienced a huge increase of 25%, since 2007, in its PPP cost of living. Consequently, real wages dropped and, thus, its living-wage gap increased four points from 63 to 67%. Singapore experienced a similar behaviour, which increased its gap from 50 to 53. Hong Kong barely managed to leave its living-wage gap at 32. For further detail see table T4 in page 25.
Chart LG1: 2009 Gaps of
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