Residents of Tokyo have the highest purchasing power in the world, edging out people in Los Angeles, Sydney, London and Toronto, according to a new survey by the Swiss banking giant UBS that uses the "Big Mac" as its benchmark.
Tokyo scored at the top of the survey, which aims to eliminate variables such as exchange rates, even though it is one of the most expensive cities in the world, UBS said in the "Prices and Earnings" report released Wednesday.
"Wages only become meaningful in relation to prices — that is, what can be bought with the money earned," it said.
The bank calculated the "weighted net hourly wage in 14 professions" and divided it into the local price of "a globally available product," for which it chose McDonald's flagship hamburger.
"On a global average, 35 minutes of work buys a Big Mac," it said. "But the disparities are huge: in Nairobi, 1 1/2 hours' work is needed to buy the burger with the net hourly wage there. In the U.S. cities of Los Angeles, New York, Chicago and Miami, a maximum of 13 minutes' labor is needed."
In Tokyo, it takes a mere 10 minutes. Bogota, Colombia, came in last among the 70 cities surveyed at 97 minutes.
The UBS survey, conducted every three years, rated Oslo as the most expensive city on the basis of the cost of a basket of 122 goods and services, excluding rent. It was followed by London; Copenhagen, Denmark; Zurich, Switzerland; Tokyo; Geneva; New York; Dublin, Ireland; Stockholm, Sweden; and Helsinki, Finland.
The least expensive cities were Manila, Philippines; Delhi; Buenos Aires; Bombay and Kuala Lumpur.
UBS said that if the cost of housing was included, "life is particularly expensive in London and New York."
The bank also compared wages. In that contest Copenhagen was tops, with an index of 118.2. For that comparison, New York — in fifth place — was taken as the base with an index of 100. Second place went to Oslo, followed by Zurich and Geneva. London was in sixth, followed by Chicago, Dublin, Frankfurt and Brussels.
At the other end was Delhi with an index of 6.1.
"In the cities of Western Europe and North America, workers in 14 representative professions earn a gross hourly wage averaging US$18 (euro14); in the Eastern European and Asian cities examined, the figure was only US$4-US$5 (euro3.10-euro3.90)."
But taxes and social security payments take a big bit in northern Europe, with Scandinavian and German cities losing ground.
Rankings were similar to the last survey in 2003, with changes resulting largely from shifts in foreign exchange rates, the study said. New York and Chicago dropped in the expensive cities ranking, mostly due to the weaker dollar.
"Shanghai and Beijing, meanwhile, remain comparatively inexpensive despite an economic boom because the national currency, the renminbi, has so far resisted pressures to appreciate."
Workers in Seoul, South Korea, work the longest. Those in Paris have the shortest work week.
"Based on a 42-hour work week, Asian workers labor about 50 days a year more than their peers in Paris," it said.
The study said a dollar earned in Los Angeles, after deducting taxes and social security contributions, is worth more than in Chicago, New York, Miami, Toronto and Montreal.
"Although the highest wages are paid in New York, it also has the highest cost of living anywhere in the Americas," it said. "Thanks to their much higher wages, after buying the basic basket of goods and services, workers in North American cities have far more left over for vacations, luxury items or savings than their counterparts in Latin America. The average purchasing power in Central and South America is just a third of the level in the North American cities."