copy the linklink copied!Average wage
“Average wage (AW)” is an important metric as all pension modelling results are presented as multiples of this measure. The average for all OECD countries was USD 41 479 in 2018.
Table 7.5 reports the OECD’s average wage (AW) levels for the year 2018. 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 41 479 in 2018 at market exchange rates. Switzerland and Iceland have the highest levels at USD 92 964 and USD 84 510, respectively. These are approximately 15 times the level recorded in Mexico, at USD 6 350, which is followed by the next lowest country, Turkey (USD 9 718).
At PPP wages averaged USD 45 6244. Switzerland is again highest amongst OECD countries, at USD 76 419, with Luxembourg, Germany and Iceland next at USD 68 240, USD 66 521 and USD 66 165 respectively. Mexico is again the lowest, at USD 13 027, but is now followed by Chile and Latvia at around USD 23 500. 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 1 522 in India to a high of USD 26 614 in Saudi Arabia, at market exchange rates.
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). 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) also included a comparison of replacement rates under the old and new measures of earnings for eight countries where the results were significantly different.
Further Reading
OECD (2019), Taxing Wages 2019, OECD Publishing, Paris, https://dx.doi.org/10.1787/tax_wages-2019-en.
OECD (2009), Pensions at a Glance 2009: Retirement-Income Systems in OECD Countries, OECD Publishing, Paris, https://dx.doi.org/10.1787/pension_glance-2009-en.
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