Here’s how South Africa’s take home pay compares to other countries

Relocation company, CapRelo, has published a new report comparing the average annual wage around the world.

CapRelo examined a report from an intergovernmental economic organization listing the average annual salary for the countries assessed. After converting local currencies to their equivalent in US dollars, it was possible to compile a map which illustrates how much the average worker can expect to make around the globe.

The countries in darker red are nations where workers are compensated the most.

Unsurprisingly developed countries typically compensate their employees the best, with Switzerland paying out an average of $85,718 a year (R1,031,054).

At the other end of the scale, workers in India can expect to earn just $1,670 (R20,087) annually.

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While countries like Denmark pay extremely well compared to other countries on the list, they are also known for high tax rates.

CapRelo calculated this amount by taking post-tax earnings and dividing them by pre-tax earnings.

Using this methodology the differences in take-home and nominal pay become much more pronounced.

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As a final consideration, CapRelo also looked at the purchasing power of these countries to determine how much the post-tax take-home pay was actually “worth.”

They did this using the Big Mac Index, a metric devised by The Economist that takes the price of a McDonald’s Big Mac in two countries to determine the relative value of money in each place.

“As a result, we see that while somewhere like Russia has an average post-tax take-home pay amount equivalent to just $8,456, that money allows someone to buy the same amount of ‘stuff’ as someone with $19,488 in America,” CapRelo said.

“On the flip side, Switzerland’s average take-home pay of $84,006 only goes as far as $65,567 would in the United States.”

Click on image to enlarge.

South Africa

While South Africa does not feature in CapRelo’s report, it’s still possible to get an indication of where South Africa sits on the list, based on local data.

According to BankservAfrica’s latest monthly data, the average take home pay in South Africa right now is R14,502

This equates to an average annual salary of R174,024 ($14,447) putting South Africa in the middle of the list, somewhere between Greece ($14,967) and Portugal ($13,108).

While this is a somewhat surprising position for South Africa, it must also be remembered that employees in Portugal and Greece are earning in euros, which has a much stronger power relative to the dollar than the rand.

Purchasing power

South Africa has one of the most undervalued currencies in the world, where at January 2018 it was undervalued by 53.6%. This means that a South African in the US would expect to pay a lot more for the same product that would be less than half the price in their home country.

While the rand is currently trading just over R12 to the dollar, the Big Mac Index assessment says it should actually be R5.68.

In the US, a Big Mac sells for $5.30 on average in 2018 – in South Africa the R30 price is equivalent to $2.45.

In other words, $1 in South Africa would be able to buy the same amount as $2.16 in United States, making South Africa’s average take-home worth $31,207, in terms of purchasing power.

Read: Here’s where the rand is expected to hold during its ‘quiet day’

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Here’s how South Africa’s take home pay compares to other countries