Oslo, London, Copenhagen, Zurich and Tokyo are the world’s most expensive cities and workers in Zurich and Geneva receive the highest net wa...

Oslo, London, Copenhagen, Zurich and Tokyo are the world’s most expensive cities and workers in Zurich and Geneva receive the highest net wages giving them the most purchasing power, according to a comparison on world cities by UBS Wealth Management. The study, entitled “Prices and Earnings: A Global Comparison Purchasing Power in 71 Cities around the World,” showed that life is particularly expensive in London and New York if the cost of housing is included. But the world’s cheapest cities in relation to a standardized basket of 122 goods and services are Kuala Lumpur, Mumbai, Delhi and Buenos Aires. Compared to the 2003 edition of the UBS study, the last time the study was don, New York and Chicago have dropped in the rankings, mostly due to the weaker dollar. Shanghai and Beijing remain comparatively inexpensive despite an economic boom, because the national currency, the renminbi, has so far resisted pressures to appreciate. In the cities of Western Europe and North America, workers in 14 representative professions earn a gross hourly wage averaging $18; in the Eastern European and Asian cities examined, the figure was only $4 to $5. The highest wages are paid in Copenhagen, Oslo, Zurich, Geneva, New York and London. In a comparison of net wages, the Scandinavian and German cities lose ground due to their high tax rates and social security payments. “Wages only become meaningful in relation to prices, ie, what can be bought with the money earned,” said the UBS study. “A globally available product like a Big Mac can make the relationship between wages and prices much clearer. On a global average, 35 minutes of work buys a Big Mac. But the disparities are huge: in Nairobi, one and a half hours' work is needed to buy the burger with the average net hourly wage there.” In the US cities of Los Angeles, New York, Chicago and Miami, a maximum of 13 minutes' labour is needed. Although the comprehensive comparison of purchasing power and gross wages puts them at the top of the table, higher production costs mean that workers in Swiss and Scandinavian cities need 15 to 20 minutes for their Big Macs. After buying the study's basic basket of goods and services, earners in Zurich, Geneva, Dublin, Los Angeles and Luxembourg retain the highest portion of their net wages for discretionary spending like vacations, luxury items or savings. Asian employees get paid the least, but work the longest hours, according to the study. With a mean annual working time of 2088 hours, people work longest in the Asian cities. Based on a 42-hour work week, Asian workers labour about 50 days a year more than their peers in Paris, where a working year is just 1480 hours, or Berlin, where a years' work equals 1610 hours. Based on historical price data, the study showed significant price convergence within the European Union internal market. The mean relative price spread among the cities of the EU-15 in the survey has dropped by around a third since 1985. In the comparison of purchasing power, the Swiss cities of Zurich and Geneva remain at the top, according to the study. Public sector wages largely support this result, since, in contrast to many emerging countries where teachers and bus drivers earn far less than comparable professions in the private sector, these jobs are comparatively well paid in Switzerland (and in Scandinavia). In terms of prices, too, the Swiss cities are at the fore. Food prices in particular confirm the country's image as a high-priced zone - only Tokyo is marginally pricier. Price differences between Geneva and Zurich are narrower for tradable goods than for services, which are some ten percent cheaper in Geneva. The UBS study "Prices and Earnings" can be downloaded under the following link: www.ubs.com/research.