Average income around the world

Difference between wage and income

The wage or salary is paid to a worker or employee for his work in an employment relationship. Self-employed persons, freelancers, pensioners or also social welfare recipients have neither wage nor salary, but nevertheless an income. Workers or employees can also have additional income to their wages or salary. This includes, for example, capital gains (e.g. securities or interest) or rentals.

Steve Jobs had an annual salary of only $1 for a long time. In addition, however, he had an income, namely the proceeds from rising stock prices. In many countries, interest is also paid on shareholders' deposits in corporations. These are also income, but not wages, because they do not arise from active work.

A person's income is therefore the sum of all money earned. The average income of a country is calculated from the gross national product and the number of inhabitants. Dividing all earnings and profits of all inhabitants (= gross national income) by the number of inhabitants gives the average income per person. This includes all wages and salaries, but also other income, e.g. from capital gains.

At first glance, that may sound somewhat inaccurate in a country comparison, as companies also generate an income. Regardless of size, the company is also owned by individuals. Therefore, the income of the owners increases to the same extent as the income of their companies.

Salary, on the other hand, is something quite different and can only be compared internationally in a few cases. It only includes those who also receive a salary (or wage) and ignores large parts of the money earned. Moreover, what is covered by this salary varies from country to country. In the major industrialized nations, social security contributions (e.g.: Pension, health care, accident and health insurance, unemployment insurance or even insolvency contributions) are parts of the salary. Sometimes the employer already pays part of it, and this part is no longer part of the gross salary. In other countries, there are no employer contributions at all, or even unemployment or pension insurance. Worldwide, around 4 billion people live without social security.

Another difficulty in the statistics is already the determination of salaries. In countries where social insurance does not exist, the state has hardly any possibilities for a reasonably accurate count. Of course, any state could simply count its taxpayers. But what reason does an employer have to report his employees at all? Once there is no social security, there is almost no incentive to do so.

Niger, Thailand and Cambodia, for example, have had unemployment rates well below 1% for decades. This is not because these countries have full employment, but because there are no benefits to register as employed or unemployed. Those who are not registered do exist – but do not appear in the official statistics.

In the particularly poor countries, there is also the fact that they cannot afford the luxury of a governmental – and thus taxpayer-funded – statistical authority. Apart from a few unrepresentative survey results, there are often no reliable figures. This is also the reason why no average salary is given for numerous countries. Even determining an average value that is comparable across countries is therefore complex to impossible. The specification of a median value, which is often desired here, is then already pure utopia.

Surviving on 32 USD per month?

The lower end of the table clearly shows that countries like the US and Australia are doing pretty well. Almost all countries with a remarkably low income are also developing countries with unstable political and economic conditions. The figures are quite correct in content, but also reflect only what is actually recorded by the official side. Illicit services and sales are not included in government statistics. And that, in turn, reduces gross national income. Such numbers should always to be looked at with caution.