The Big Mac index
The Big Mac index
How many minutes does an average employee in Nairobi have to work for to earn enough money for a Hamburger? And how long does it take people from Johannesburg or London? For more information about Kenyan’s purchasing power and the Big-Mac-Index.
How many minutes do you have to work for a Hamburger? The Swiss UBS-Bank has been comparing wages and prices in 73 big cities all over the world since 1970. Amongst these cities are three from Africa: Nairobi, Cairo and Johannesburg. It is no surprise that Nairobi comes in last with hourly wages alongside Manila, Jakarta and Delhi. The average employee in Nairobi nets 1.3 USD per hour. In Cairo it’s 1.6 USD, Joburg 3.9 USD and in London 10.6 USD.
Comparing wages is quite difficult because life might be much more expensive in Joburg or London than in Delhi and although you may earn more, your dollars might not go such a long way.
To compare the purchasing power, UBS is using the Big-Mac-Index. In other words, they are analysing how many minutes people have to work to afford a Big Mac (Hamburger), 1kg of bread or 1kg of rice. The latest survey was carried out in March 2009 and there are some interesting results.
In Nairobi, an average employee has to work longer than anywhere else to earn enough money for a Big Mac – 158 minutes. In Cairo it’s 82 minutes, Johannesburg 26 minutes and London 13. For 1kg of rice, a Nairobi resident has to work 49 minutes and for 1kg of bread, 39 minutes. People from Shanghai, Beijing, Cairo, Caracas, Bangkok and Jakarta have to work even longer for their daily bread, whereas Johannesburg residents only have to work 12 minutes, Londoners 10 minutes.
The fast-food-chain Mc Donalds, maker of the Big Mac Hamburger, exists in almost every big city of the world but not in Nairobi. No wonder. With the low level of wages, an average Kenyan would most likely prefer to buy 4kg of bread instead of 1 Big Mac. And on top of all the people who work for low wages, many people don’t have jobs at all. From a nutritional point of view the non-existence of the fast-food-chain is no big loss because fast food is not only expensive but also unhealthy and contains a lot of fat.
UBS has also compared the working hours for an iPod. Again Nairobi is ranking at the bottom end with 160 hours of work for an iPod on average. This is only topped by Mumbai. Someone in Cairo has to work 105 hours, in Joburg it’s 41.5 hours and in London only 11 hours to buy the desired gadget.
For the full report, click here http://www.ubs.com/1/e/wealthmanagement/wealth_management_research/prices_earnings.html