Study Material | Test Series | Crash Course
Drishti IAS
call1800-121-6260 / 011-47532596
Drishti The Vision Foundation
(A unit of VDK Eduventures Pvt. Ltd.)
Current Affairs Crash Course Download Player Download Android App
UBS Prices & Earnings Report 2015
Jan 07, 2016

Swiss Bank UBS recently released the 16th edition of its UBS Prices and Earnings study, which examines prices, wages and earners' purchasing power in 71 cities worldwide. The study, published roughly every three years since 1971, compiles over 68,000 data points reflecting economic events that have shaped the world since the last edition in 2012.

1. The Most Expensive Cities:
Zurich, Geneva and New York City are the most expensive cities in the world, according to the prices for a standardized basket of 122 goods and services. New York is the third-most expensive, excluding rent, and rises to the top spot when rent is included. Chicago is the seventh priciest, including and excluding rent. Miami and Los Angeles are in 16th and 17th places, respectively, and 11th and 13th including rent. By contrast, the cost of living is lowest in certain Eastern European cities such as Kiev, which is the cheapest city.

2. The Highest Wages: Workers in Zurich, Geneva and Luxembourg earn the highest gross wages. New York earns the fourth highest. Miami is ranked fifth, Los Angeles ninth, and Chicago 10th. After taxes and social security contributions, Copenhagen loses 20 spots in the rankings, due to income deductions of around 45%. In Nairobi, Jakarta and Kiev, the lowest-ranked cities, workers receive only around 5% of average gross earnings in Zurich.

3. How Many Hours' Earnings buy a Big Mac or an iPhone?:
Wage value is best described by comparing domestic purchasing power for goods that are as homogenous as possible worldwide. Salaries go farthest in Luxembourg, Zurich and Geneva, where the net hourly wage buys the most goods and services from the standardized basket. Nairobi and Jakarta have the lowest purchasing power, with workers there able to afford just one-tenth as much as those in Luxembourg. New York, Los Angeles, Chicago, and Miami are among just seven major cities globally where the average worker has to work less than 30 hours to earn enough to buy an iPhone 6.

In India, people in Delhi need to work for 360.3 hours to afford an iPhone6, the third highest in the world. Another Indian city Mumbai comes fifth with 349.4 hours. Globally, the working time required to buy an iPhone6 of 16 GB is the most in Keiv with 627.2 hours, followed by Jakarta/Nairobi, sharing the second place with 468 hours. Cairo is fourth at 353.4 hours.

Similarly, to be able to buy a Big Mac Burger, workers in Hong Kong only have to work on average nine minutes, while in Mumbai one has to work for 40 minutes and in case of Delhi it is 50 minutes. Workers in Nairobi have to work almost three hours to buy a Big Mac.

(Note: The report considered staple consumer goods like McDonald's Big Mac and Apple iPhone, as these products are of the same quality and nature worldwide, making their prices and affordability comparable.)

4. Shortest Working hours in Paris:
People work over 2,000 hours per year in 19 major cities, most of them in Asia and the Middle East. The shortest working schedule and highest number of days of paid vacation are enjoyed by workers in Western Europe. Workers in Hong Kong work 1,000 more hours than those in Paris, a difference of around four hours per working day. Of the US cities in the study, the average worker in Chicago and Los Angeles has the least amount of paid vacation a year at 14 days.

5. Impact of Recent Economic Events:
The Swiss National Bank abandoned its price floor for the Euro versus the Swiss Franc in January, which had a big impact on the indicators. Zurich and Geneva rose to the top of the rankings. Eurozone cities plunged. Russian and Ukrainian cities plummeted due to the Ukrainian conflict and ensuing Russian sanctions, with Kiev now at the bottom of the price and wage charts. Instability in South America greatly affected exchange rates, altering the positions of cities such as Sao Paulo and Buenos Aires. In Asia, the Japanese Yen lost value, but the South Korean Won has appreciated versus the US Dollar since 2012, meaning Tokyo now ranks lower and Seoul higher. Asia remains the continent with the largest variations in prices and wages among cities, while North America is still the most uniform.
As per the report, if one takes net hourly pay as the benchmark, two Indian cities (New Delhi and Mumbai) were among the bottom ten exhibiting the lowest purchasing power. However, Indians seem to be partially compensating for low purchasing power through longer working hours.

  • In New Delhi, workers slog for 2,214 hours per year and have only 26 days of holiday annually, while in Mumbai it was 2,277 hours per year and 21 days leave annually.

  • On average, workers worldwide spend over 40 hours per week at their workplace, and receive over 4.5 weeks of paid vacation.

  • Hong Kong tops the list in terms of working hours as the average working hours in that city is over 50 per week, with only 17 days of holiday annually, while in Paris, people work only around 35 hours per week (in line with new government regulations) and have 29 days of paid vacation. 


Helpline Number : 87501 87501
To Subscribe Newsletter and Get Updates.

http://www.drishtiias.com/upsc-current-affairs-article-UBS-Prices--Earnings-Report-2015