The Cost of living index has been calculated in relation to the cost of living in the UK. For example, living in Switzerland costs 90% more than living in Britain, so has an index of 1.9. Poland, Russia and China have the lowest cost of living, with an index of 0.6. This means that it’s 40% cheaper to live in these three countries compared to Britain.

Both the average salary and the relative cost of living needs to be taken into consideration when calculating the Equivalent earnings for each scenario.

Example:

• Sandra is an Accountant working in Britain. Is Sandra likely to be better or worse off doing the same job in Norway? She can see that average earnings are higher, however the cost of living is also higher.
• Imagine Sandra earned the average salary of £36,561 as an Accountant in Britain. If she found a job in Norway paying the average salary for this role, she could expect to earn £39,295 – that’s £2,734 (almost 7.5%) more.
• However, the cost of living is also 60% more (index of 1.6). When we factor this in, it reduces Sandra’s overall standard of living, if she moved to Norway. Her Equivalent earnings would be £24,559, making her effectively £12,002 worse off than working in Britain in the same role.
• The calculation used in Sandra’s case is: £39,295 / 1.6 = £24,559 (Actual salary in Norway / Cost of living index = Equivalent salary)

If you’re a small business owner, why not check out our resources for tips on how to market your business more effectively, stand out from the competition and maximise your earning potential? 

Sources

Worldwide salary data compiled in October 2019 using the following sources:

• https://www.payscale.com/
• http://www.salaryexplorer.com/
• https://www.glassdoor.co.uk/
• https://www.indeed.co.uk
• https://neuvoo.ca
• https://www.careerexplorer.com/
• https://www.erieri.com
• https://www.careercross.com
• https://www.salaryexpert.com

All salaries converted to GBP using correct conversion rate on 28 October 2019.

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