Average wage
Table 7.5 reports the OECD’s full-time average wage (AW) levels for the year 2020. The wage earnings are defined as gross wages before deductions of any kind (including personal income taxes and social security contributions), but including overtime pay and other cash supplements paid to employees.
Average wages are displayed in national currencies and in US dollars (both at market exchange rates and at purchasing power parities, PPP). The PPP exchange rate adjusts for the fact that the purchasing power of a dollar varies between countries: it allows for differences in the price of a basket of goods and services between countries.
Wage earnings across the OECD countries averaged USD 39 178 in 2020 at market exchange rates. Switzerland has the highest level at USD 93 049. This is over 20 times the level recorded in Colombia, at USD 4 339, and 15 times that of Mexico at USD 6 105.
At PPP wages averaged USD 46 520. Switzerland is again highest amongst OECD countries, at USD 76 377, with, Germany, Norway and Luxembourg next at USD 69 968, USD 67 438 and USD 67 162 respectively. Colombia is again the lowest, at USD 11 861, followed by Mexico at USD 13 799. The higher figure for PPP wages suggests that many OECD countries’ exchange rates with the US Dollar were lower than the rate that would equalise the cost of a standard basket of goods and services.
Average wages for the other major economies are not based on the average wage definition or another consistent basis as such series are unfortunately not available. Data have been collected from national sources and thus vary between average individual income, average covered wage and average wage for a particular group of workers as available. The figures used range from a low of USD 2 024 in India to a high of USD 26 614 in Saudi Arabia, at market exchange rates.
Between 2019 and 2020, the impact of COVID-19 on wawage figures varied considerably. In Colombia, for example, the average wage, in national currency, decreased by 13%, but it increased by more than 5% in Hungary, Lithuania and the United States, and 21% in Turkey (Figure 7.5). Across the OECD as a whole wages increased slightly by an average of 0.6%, while it had increased by 4.0% on average per year since 2000.
Definition and measurement
The “average worker” earnings series (AW), defined as the average full-time adult gross wage earnings, was adopted from the second edition of Pensions at a Glance (OECD, 2007[2]). This concept is broader than the previous benchmark of the “average manual production worker” (APW) because it covers more economic sectors and includes both manual and non-manual workers. The new AW measure was introduced in the OECD report Taxing Wages and also serves as benchmark for Benefits and Wages. The third edition of Pensions at a Glance (OECD, 2009[3]) also included a comparison of replacement rates under the old and new measures of earnings for eight countries where the results were significantly different.
Source: OECD (2020[5]), Taxing Wages 2020, https://dx.doi.org/10.1787/047072cd-en; OECD (2021[4]), Taxing Wages 2021, https://dx.doi.org/10.1787/83a87978-en.