5 steps to calculating a Living Wage
There are 5 steps to calculating the Asia Floor Wage
Step 1 - Food basket research by country, calculates the cost of food to ensure an adult is able to afford a standard intake of 3000 calories a day. For the Asia Floor Wage it is assumed that food costs account for 50% of expenditure.
Step 2 - Non food costs including housing, clothing, healthcare (including maternity and child care), education, fuel, transport and savings are included.
Step 3 - It is taken that a worker is not just supporting themselves. On average it has been calculated in Asia that a worker is supporting themselves and the equivalent of two other adults - a child is counted as half an adult. Therefore the costs calculated above are times by 3.
These steps are calculated in the local currency.
Step 4 - In order to gain a regional living wage, the calculations are then converted into Purchasing Power Parity dollars (PPP$) this is an imaginary currency used by the World Bank which allows us to compare the standard of living between countries, regardless of the national currency.
Step 5 - Takes the PPP$ figures across the region and calculates an average, this average figure is then converted back to local currency.