Purchasing power of the Indian Metros – Mumbai, Delhi are among the lowest – UBS report
By Manoj Govindassamy on 31 August, 2009, 11:39 am
UBS, the Swiss financial firm and the world’s largest manager of private wealth assets released “Prices and Earnings” report for 2009. The report is pretty detailed and gives a comparison of purchasing power around the globe – more specifically on 73 international cities. It reveals some good facts about the Indian metros Delhi and Mumbai.
Delhi and Mumbai has the lowest Price Level (Cost of Living) among the world metros. But, these cities at the same time receive the lowest wage (Cheap labour) in the list. The report also detailed the purchasing power of the world cities.
UBS compared Price Levels and Wage Levels ranking lists. Wages alone do not determine the standard of living in a particular city or country.A betterwayto measure prosperity is to divide the average annual salary by the total price of basket of goods and services. This tells how much purchasing power local wages have. In a Western European city, one year’s gross income can buy roughly 13 of baskets; in Eastern European cities, it can only buy six of them. In North America, an employee can buy the same basket around 16 times, while South American workers have to make do with only five baskets. Asia still shows huge discrepancies in purchasing power. Whereas employees in Sydney can buy 16 of baskets, their counterparts in the Asian cities we looked at can only afford 5.5 of them.
Average gross hourly wages can purchase the most in Copenhagen, Zurich and Geneva, followed by Los Angeles, Sydney and Miami. Bringing up the rear are Jakarta, Manila, Mumbai and Nairobi, where average gross hourly wages have between 11% and 15% of the purchasing power of a salary in Zurich.
UBS also took an example to further explain the concept of buying power. The iPod nano (with 8 GB of storage) is an ideal example of a globally uniform product. An average wage-earner in Zurich and New York can buy a nano from an Apple store after nine hours of work. At the other end of the spectrum are workers in Mumbai, who need to work 20 nine-hour days – roughly the equivalent of a month’s salary to purchase a nano.
An iPod nano: a day’s wages in Zurich and New York, around 20 days in Mumbai
Read the more detailed report here
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