UK outclassed in pay league

August 14, 1998

Chris Johnston reports on the findings of a survey comparing Commonwealth academic salaries with those in the US

The Big Mac Index, devised by The Economist magazine, has been used by two Australian academics to calculate the true value of academic salaries across the Commonwealth.

Comparing salaries with the United States as a bench mark, the researchers calculated that the real salaries of British academics are up to 36 per cent lower and that of the eight countries considered, only South African academics are paid less (see graph).

Australian salaries are slightly higher than the US, while Canadian salaries are only marginally lower in most cases. But the authors say that Hong Kong and Singapore seem to value academic talent more highly: "Hong Kong real salaries are between 200 to 300 per cent higher than the US for every position, while real salaries in Singapore are up to 83 per cent higher." Low tax rates make Hong Kong even more attractive.

The study, by Li Lian Ong and Jason Mitchell, finds that real salaries are highest in Hong Kong and Singapore, but that quality of life factors make Australia and the United States relatively attractive, while Canada and New Zealand are less attractive for visiting or migrating academics. Their research replicates a study last year by the Commonwealth Higher Education Management Services of salaries in seven Commonwealth countries.

In Professors and Hamburgers: An International Comparison of Real Academic Salaries, the authors say that it is inappropriate to compare salaries using exchange rates, and argue that nominal salaries should be converted to purchasing power equivalents in a standard currency using a relative price index.

They chose the Big Mac Index because the McDonald's hamburger is the "perfect universal commodity", as it is made to the same recipe in more than 80 countries and thus represents a standard basket of goods and services. They say that the index has been shown to "perform just as well as most other measures".

The study also suggests that the best time to visit or relocate to another nation is when academics are at senior lecturer/associate professor level, as the real salary differentials for each country relative to the US are "best" then. However, Li Lian Ong and Mitchell point out that consideration should also be given to other compensations and benefits available on top of basic salaries.

They also note that some academics may choose to trade material reward for superior quality of life. Using The Economist's "Places to Live" rankings, Australia is the best place to live overall, as it has the best quality of life and the highest real academic salaries of the developed nations. Australian, Hong Kong and American academics would experience lower quality of life and less purchasing power if they moved to Canada or New Zealand, and despite its "very low" academic salaries, the quality of life makes Britain "quite attractive".

The paper was completed by Li Lian Ong, a Macquarie Bank international economist, and Jason Mitchell, a University of Sydney lecturer, while they were visiting lecturers at the University of Western Australia's department of accounting and finance. It can be found at: WorkingPapers/

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