Minimum wage: Significant disparities between countries
When established, the minimum wage is supposed to keep up with the cost of living. It should allow a worker to live "decently." However, countries can each develop their own definition of what is decent. In the context of a housing crisis and sometimes poorly managed inflation, many foreign professionals have noted a decrease in their disposable income.
Inflation and minimum wage increases
As of April 1, the minimum hourly wage in Canada (federal minimum) and New Zealand has risen to CAD 17.30 (EUR 11.53) and NZD 23.15 (EUR 12.76), respectively. These increases take inflation into account. However, in Canada, the federal minimum is supplemented by provincial rules, which are free to set their own minimum wages. Alberta, Saskatchewan, or Nova Scotia set it at around CAD 15 (EUR 9.99), but it is above CAD 16 (EUR 10.66) in British Columbia, Ontario, and Nunavut. Yukon offers an even higher minimum wage: CAD 17.59 per hour (EUR 11.72).
In the United States, the federal wage (USD 7.25 per hour or EUR 6.64) also sets a baseline that states can exceed or not. Alabama, Indiana, Iowa, Kansas, and Idaho stick to the federal rate. Maine, Maryland, and New York double the federal rate (respectively, USD 14.15 and 15 per hour / EUR 12.95 and 13.73).
Australia has raised its hourly minimum wage by 3.75%, up to AUD 24.10 on July 1 (EUR 14.49). Like in Canada and New Zealand, this rise follows the price evolutions. In the United Kingdom, the hourly minimum wage is GBP 11.44 (EUR 13.36). It is KRW 9860 (EUR 6.57) in South Korea and around JPY 1000 (EUR 6.23) in Japan, with disparities depending on the prefecture. A recent government study highlights Japan's lag behind other major economies. The Japanese minimum wage is far behind Canadian, Australian, and New Zealand standards and also behind the highest minimum wages in European countries, with Luxembourg leading (EUR 14.86 for an unskilled worker, EUR 17.83 for a skilled worker).
European Union (EU): Disparities among states
Most EU member states (22 out of 27) have established a minimum wage. Luxembourg, Ireland, Germany, and the Netherlands are the most generous, with a minimum wage set at EUR 2571, 2146.3, 2054, and 1995 per month, respectively. Belgium and France are just behind, with EUR 1994 and 1766 per month. In Spain and Slovenia, the minimum wage is EUR 1323 and 1253 per month. It varies between EUR 600 and 980 in Eastern Europe (Estonia, Poland, Romania, Greece...) and Portugal. Only Bulgaria offers a minimum wage below EUR 500 per month (EUR 477).
However, EU countries are still far from the harmonization desired by the European Parliament. While the EU continues to lack foreign talent, the European Parliament notes increased job precariousness and poverty. It points out the increase in the wage gap since COVID—a gap that was already significant before the health crisis. By "harmonization," the European Parliament does not mean imposing the same minimum wage on all member states. This area remains exclusively under the states' control. However, the new European directive on the minimum wage aims to combat precarity effectively. Residents should be able to live decently. The directive invites states to accelerate their measures to fight the wage gap between women and men. In 2022, 60% of those earning the minimum wage were women.
Countries that don't have a minimum wage
The minimum wage is not mandatory, and several countries do not have one. For example, wages are negotiated at the industry level in Italy, Austria, Denmark, Sweden, and Finland. Norway, Iceland, and Switzerland also do not offer a minimum wage, nor do the United Arab Emirates (UAE) and Saudi Arabia (in the private sector). In India, there is also no legislation setting a minimum wage; its calculation method is complex. It takes into account various criteria (geographical area, sector of activity, position held, level of qualification).
Are expatriates affected by minimum wage laws?
The question is more complex than it seems. Indeed, it raises a debate that has crystallized tensions between foreign and local employees for years. At first glance, one might think that expatriates are not affected by the presence or absence of a minimum wage. Recruited for their talent, they "supposedly" earn more than local employees. They have been able to negotiate their salary and benefits. However, this framework corresponds much more to the idealized view of the expat worker than to reality. Moreover, it obscures the fact that there are various situations of foreign workers. Strictly speaking, an expatriate is someone who goes on a mission abroad under an expatriation contract. In a broader sense, an expatriate is someone who leaves their country to immigrate to another country.
If the vision of privileged expats endures, it is partly because it focuses on foreign workers who occupy the highest socio-professional categories (SPCs). It forgets, voluntarily or not, the thousands of foreign workers in other SPCs. In reality, many expatriate workers cannot negotiate their salary (or perhaps marginally). The global labor shortage in key sectors (industry, transportation, restaurant-hospitality, health, education...) further reduces any possible room for negotiation.
Minimum wage and salary gap between expatriates and locals
Labor shortages have reignited the debate on the salary gap between foreign workers and locals. Because if the "golden expat package" is out of fashion, foreign professionals from the highest SPCs generally earn more than locals. Companies supporting this model attest to recruiting foreigners for their talent—a talent they do not find among locals. They also highlight that foreign professionals coming from wealthy countries are "naturally" paid according to their country's standards. This isn't a new argument. In 2016, a study published in The Guardian revealed that the salary gap between expats and locals could reach 400%. In India or China, it could even exceed 900%. In 2023, international companies sending expatriates to the Asia-Pacific area recognized the need to reserve three-quarters of their personnel budget for foreign workers, which is unacceptable for local employees who, despite their skills, remain paid at the minimum wage.
Again, labor shortages (and the consequences of the health crisis) have been game-changers. When borders closed, companies traditionally employing foreigners had to rely on locals. Gulf countries accelerated their job nationalization policies, which means fewer jobs for foreign workers (for example, in Kuwait). Singapore is also taking measures to favor the employment of locals, and China is accelerating the training of local talents to recruit fewer foreign executives. When the borders reopened, expatriates had to deal with labor shortages, more stringent immigration reforms, and increased competition among workers.
Wealth disparities among countries
Where should you move? Should you choose a country with a high Gross National Income (GNI)?
Released in July, the new World Bank report on state income categorizes the world's economies into four major groups: countries with low GNI, lower-middle, upper-middle, and high-income countries. According to the report, a low national income per capita (GNI) is below USD 1145/month, and a high GNI is above USD 14,000. Middle GNIs range from USD 1146 (low level) to more than USD 1000 (high level).
The health crisis has exacerbated wealth disparities among countries. Canada, the United States, Australia, New Zealand, Japan, South Korea, the United Arab Emirates (UAE), Saudi Arabia, Oman, Qatar, Russia, the United Kingdom, and European countries are among the high-income countries. China, Brazil, Argentina, Mexico, South Africa, and Algeria belong to the "upper middle" category: their GNI ranges between USD 4516 and 14,005. The GNI of India, the Philippines, and Morocco are in the "lower middle" category (between USD 1146 and 4515). Unsurprisingly, the poorest countries have a GNI below USD 1146.
The link between GNI, wage levels, and the state's wealth doesn't go unnoticed. However, a country with a high GDP does not necessarily mean that salaries will be substantial. Despite its GDP exceeding 7% growth, India is fragile in terms of economic development: large categories of workers remain distant from the wealth produced.
Of course, your plans to move abroad cannot be based solely on a country's wealth thresholds or minimum income policy. But these data might help you better situate the target country and envisage your new life abroad.
Useful links:
Canada: know the minimum wage of a province
United States: know the minimum wage of a state
United Kingdom: minimum wage
South Korea: minimum wage
