racoma.com.phJ. Angelo Racoma on technology, economics, writing, problogging, and getting things done

The other day, I posted at Pinoy.tech.blog on a Computerworld IT compensation survey where I compute that we Filipinos get about 20 times less than the average compensation of our western counterparts.  Fellow PTB blogger AnP commented that I may not exactly be doing an apples-to-apples comparison, due to the disparities in cost of living.  So I did some further computations (as likewise commented on PTB), and came up with this:

Here we go with the economic jargon. According to the Economist’s Big Mac Index (BMI) (website, wikipedia),
which is an informal proxy for purchasing power parity (PPP), for June
of 2005, a Big Mac in the US costs US$ 3.07 and in the Philippines, an
equivalent of US$ 1.47, meaning the Philippine Peso, at the standing
exchange rate of about PhP 55 to US$ 1, is undervalued against the
dollar by 52%.

So we take the minimum IT salary of US$ 50,000
per year, divide by 3.06, then multiply with 1.47. We get about US$
24,000 per year, or about PhP 1.32 million annually or PhP 110,000 per
month.

Hence even with a rough comparison of purchasing power, our US counterparts are earning ten times more than we are.

And
of course, we can add the nice houses, cars, healthcare, and the works.
Your run-of-the mill IT worker here in the Philippines can usually only
dream of such benefits.

So we’re still behind–we earn ten times less than our western counterparts do.  Perhaps factor in the income taxes and this will bring down the number to about 7 to 8 times, but when you think in nominal terms, that’s still a big difference in the mind of a Filipino IT worker.

Thanks for the heads up, AnP!

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