We recently compiled a list of 25 Countries with the Lowest Average Salaries in the World. To check that out, click here.
According to the ILO’s World Employment and Social Outlook: Trends 2024 report, in 2023, the global unemployment rate improved slightly to 5.1% from 5.3% in 2022. However, projections for 2024 indicate an increase to 5.2% which will translate to an additional two million job seekers. This uptick is concerning given the recent improvements in employment rates post-pandemic. The disparity between high and low-income countries also remains stark, with unemployment rates in 2023 at 4.5% for high-income and 5.7% for low-income countries, alongside a much higher jobs gap rate of 20.5% in low-income countries compared to 8.2% in high-income ones.
Wages and inflation are both critical factors in the current economic scenario. Most G20 countries have seen a decline in disposable incomes due to inflation, which is likely to persist. This erosion of living standards is highly important as extreme poverty (earning less than $2.15 per day) has increased by about 1 million workers in 2023, and moderate poverty (less than $3.65 per day) has risen by 8.4 million.
Given how income (including wages) is one of the most important factors for employee satisfaction and retention, businesses and governments must offer high enough salaries to sustain individuals financially. However, it is true that since the average income by country varies largely, it confirms the economic disparity between countries worldwide and thus, we must understand that we must not judge what is best for all countries by a single standard.
Nevertheless, Gallup’s State of the Global Workplace: 2023 Report revealed that disengaged employees cost the global economy $8.8 trillion which is equivalent to 9% of global GDP. In 2022, only 23% of employees were engaged at work. While employee engagement steadily rose over the past decade, the COVID-19 pandemic disrupted this trend.
Gallup’s analysis of over 112,000 business units also found that top-quartile teams in employee engagement achieve 10% higher customer loyalty, 23% higher profitability, and 18% higher sales productivity. Furthermore, engaged organizations experience significantly lower turnover rates. Despite the clear benefits, many organizations have yet to fully capitalize on engagement as a strategic asset.
As for countries with the highest average salaries, Germany is one of the top 10 highest-salary countries in the world with an average salary of $53,439.
Speaking of Germany, its economy has also recently observed a modest expansion in the first quarter of 2024 as the GDP grew by 0.2% quarter-on-quarter. The growth is primarily driven by a 1.2% rise in gross fixed capital formation, especially in construction investment. However, on a year-on-year basis, GDP remained stagnant at -0.2%.
Foreign trade has also boosted Germany’s economy, with exports increasing by 1.1% and imports by 0.6%, compared to declines of -0.9% and -1.6% respectively in the previous quarter. Inflation, measured at 2.2% in April 2024, is inching closer to the European Central Bank’s 2% target. Despite this positive trend in inflation, consumer spending has not significantly recovered, with both private and government consumption falling by 0.4%.
It is also interesting to note that the United Arab Emirates is often considered one of the countries with high salaries and low cost of living. The UAE offers high, tax-free salaries, especially in sectors such as oil and gas, finance, and aviation. While the cost of living in cities like Dubai and Abu Dhabi can be high, the tax-free income helps balance this out. To read more about countries with the best salaries in the world, see 20 Countries With the Highest Starting Salaries for Graduates.
On a side note, the United States is known to have the second-highest average salary in the world per month ($4954 per month) after Switzerland. To read more about salaries in the US, see Average Salary in Each State in US.
Despite the golden picture of a high-salary country, the US is plagued with a serious gender pay gap despite efforts to address it as women earn 16% less than men on average. This translates to women earning just 84 cents for every dollar a man makes. The situation is even more dire for women of color, with Latinas making only 55% and Black women making 64% of what non-Hispanic white men earn. Native American women also face a major gap as well, being paid only 59 cents for every dollar paid to white, non-Hispanic men. Over a 40-year career, a 20-year-old woman starting full-time work could lose as much as $407,760 compared to her male counterpart.
There are two types of gender pay gaps: the controlled and uncontrolled gap. The controlled gap, which factors in variables like job title, experience, and education, currently stands at 99 cents for every dollar men earn. However, the uncontrolled gap remains at 84 cents which also confirms the systemic disparities beyond individual qualifications. Despite efforts, progress in closing the gap in the US has been slow, with the pay disparity narrowing by only half a cent annually since 1963.
Some of the companies that have been at the forefront of diversity include Dell Technologies (NYSE:DELL). By 2030, Dell Technologies (NYSE:DELL) has taken upon itself to have 50% of its global workforce and 40% of its global people leaders identify as women. By 2030, Dell Technologies (NYSE:DELL) plans to have 25% of its U.S. workforce and 15% of U.S. people leaders identify as Black/African American and Hispanic/Latino people.
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Is Burundi the Country with the Lowest Average Salary in the World?
To find if Burundi is the country with the lowest average salary in the world, we first identified countries with the lowest average salaries in the world, we identified 35 countries with the lowest Gross National Income (GNI) per Capita in the World. We relied on data for GNI per Capita from the World Bank for the year 2022. Of the 35 countries, 25 with the lowest average salaries were assessed. Our methodology revealed that Burundi is indeed the country with the lowest average salary of $415 per year.
With an average salary of $415 per year, Burundi is the lowest-paying country in the world. Moreover, in 2023, Burundi fought with profound poverty as over 70% of its population struggled to meet basic needs. The situation was particularly dire for children, as around 56% of those under 5 suffered from stunting due to malnutrition. Recurring climate-related disasters also worsened the plight which led to internal displacements and damaged the livelihoods of rural communities that were heavily reliant on subsistence farming. Burundi also hosted 85,000 food-insecure refugees and asylum seekers which added to the strain on already limited resources.
To check out other countries that have the lowest average salaries, please visit 25 Countries with the Lowest Average Salaries in the World.
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Disclosure: None. This article is originally published at Insider Monkey.