Prices & Earnings 2015: iPhone 6 affordable in pricey Zurich
Prices Earnings 2015: UBS, the Swiss bank, on Thursday released the 16th edition of the triennial UBS Prices and Earnings study (microsite), which examines prices, wages and earners’ purchasing power in 71 cities worldwide. While Zurich is the most expensive city, workers in the city can buy an iPhone 6 after 21 hours of work; in Kyiv, capital of Ukraine, it takes 30 times longer.
Zurich, Geneva and New York City are the most expensive cities in the world, according to the prices for a standardised basket of 122 goods and services. When rents are added to the mix, Hong Kong moves up 13 spots in the rankings. By contrast, the cost of living is lowest in certain Eastern European cities such as Kyiv, which is the cheapest city.
Including rents, New York City is most expensive with the benchmark index at 100. Zurich is at 92.6; Dublin is at 63.1 and Brussels is at 57.3. A two-bedroom unfurnished apartment averages $4,320 a month in New York compared with $2,390 in Zurich. That compares with living costs of $1,273 for a family in Kyiv where a family pays rent of about $540.
Bus drivers in Luxembourg earn more than $85,000 per year, compared with $37,000 for their counterparts in London while shoppers in Zurich have to pay four-and-a-half times more than those in Kyiv for the same basket of groceries.
“The developing economies had been catching up over 30 years, but with the depreciation (fall in the values of their currencies) we’ve seen in the emerging markets the purchasing power has again declined in the last three years,” Daniel Kalt, a UBS economist, said Thursday. “Some of the goods consumed in Kyiv will need to be imported. The poorer the country the more it has to import goods and the worse is the hit from the depreciation of their currency.”
UBS says 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 standardised basket. Nairobi and Jakarta have the lowest purchasing power, affording just one-tenth as much as workers in Luxembourg. A Big Mac costs almost three hours of average earnings in Nairobi, compared with just nine minutes in Hong Kong.
For the iPhone 6 16GB, workers in cities such as Zurich and New York City require on average less than three days on the job to be able to grab one. In contrast, workers in Kyiv must labour, on average, over 13 weeks to earn enough for the same phone. Workers in Buenos Aires cannot access official markets to purchase the iPhone 6 locally. In Dublin it takes over 43 hours or about 6 work days to earn the price of the iPhone (the upfront price is lower where there is a carrier contract).
UBS said: “Prices of each product were an average from all survey participants and, where possible, were compared to the manufacturers’ official local retail price. The price of each product was then divided by the net hourly wage for our 15 professions and converted to either minutes or hours.”
According to the survey, people work over 2,000 hours per year in 19 major cities, most of them in Asia and the Middle East. The shortest working hours 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 more per working day.
Seoul second-costliest for food; haircuts 19 times pricier in Oslo than Jakarta
The basket of 39 food items costs over four times more in Seoul than in Kyiv, where the food basket costs the least. In terms of food prices, Seoul is second only to Zurich. Services tend to be correlated to local wages, with the cost of the basket covering services such as haircuts, dry cleaning and internet fees. Haircuts cost the most in Oslo and are 19 times pricier on average than in Jakarta.
Impact of recent economic events
UBS said that 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 Kyiv 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 São 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.