September 22, 2003. Copyright, 2003, Graphic News. All rights reserved

The real cost of a Big Mac
By Joanna Griffin

LONDON, September 22, Graphic News:  How many minutes must you work to pay for your Big Mac? As one of the few products that is truly available the world over, the time it takes to earn enough to buy the popular hefty hamburger is a useful indicator of peopleÕs purchasing power in cities around the globe.

In the latest edition of its Prices and Earnings survey, the UBS investment bank compares how long workers in 70 cities have to labour to pay for a Big Mac. It finds, for example, that in Nairobi you need to put in three hoursÕ work to buy your burger while just 10 minutes of toil are sufficient in Miami, Chicago and Los Angeles. Overall purchasing power is greatest if you live in the Swiss cities of Geneva, Basle and Zurich, or Los Angeles or Luxembourg.

This is not the first time economists have analysed how hard it is to pay for a hamburger: since 1986 the Economist has featured a Big Mac Index. But the UBS survey also reflects differences in the cost of local ingredients: Asians and Africans work longer than their counterparts in North America and Western Europe to bring home a daily kilogram of bread or rice.

And since prices alone donÕt tell you enough about the purchasing power of a cityÕs inhabitants, the UBS survey scrutinises prices of goods and services, wages, wage deductions and working hours on the five continents. The bankÕs economists analysed 35,000 individual data items to put together what is effectively a global overview of wellbeing.

According to the survey, the introduction of the euro has not levelled purchasing power throughout the eurozone: the purchasing power of the EUÕs best paid workers, in Luxembourg, remains 60% higher than that of the lowest earners in Lisbon. And the gulf is set to widen when the new eastern European members are fully signed up. Some prices have converged due to the euro, for example restaurant prices, but elsewhere disharmony rules.

The survey takes into account more than just prices and earnings: if you live in Dublin or Luxembourg, for example, you are likely to have most money left over for leisure activities and savings after paying for basic necessities but if you are a native of Copenhagen or Frankfurt, your relatively high gross purchasing power is undercut by high taxes and social security costs.

This may be one reason why Copenhagen features alongside Zurich, London, Oslo, Tokyo and Hong Kong among the worldÕs most expensive cities. Oslo has nudged Tokyo out of the number one position due to the appreciation of the yen and the depreciation of the Norwegian krone. At the other end of the scale, Bombay, Buenos Aires, Kiev and Karachi are the cheapest places to live.

Workers in Western Europe and North America earn about 15-16 euros an hour before tax and social security deductions, which buys them several hamburgers at their local branch of a well known chain. But the Big Mac is a relative luxury for their counterparts in the African and Asian cities surveyed. They earn on average just two euros per hour.
/ENDS