FAQ Salary Checks
Actual wages & Salary Check
How are the actual wages of low-, medium-, high-skilled workers arrived at?
Reported monthly earnings of workers in low-, medium-, and high-skilled occupations are obtained from the WageIndicator voluntary web surveys of 2014 and 2015. The definition of groups follows the one-digit ISCO-classification of occupations where ISCO 1-2 are clustered into high-skilled, ISCO 3-8 into medium-skilled and ISCO 9 into low-skilled groups. The minimum and maximum values represent the 25th and 50th percentiles of the wage distribution per occupation. WageIndicator prefers to offer this wage range instead of just one figure, which is usually the 40th percentile, since a range reflects the real situation better.
How does WageIndicator collect the data for the actual salary indications?
WageIndicator collects data by means of a voluntary web-based survey available at national WageIndicator sites. The WageIndicator questionnaire is offered (in 2015) in 46 languages and is operational in 84 countries. The survey questionnaire is similar to those used by statistical agencies for standard labor force surveys, it is user-friendly and consists of multiple-choice questions only. The collected data is anonymized and subject to strict security measures, safeguarding the privacy of the participating individual. In 30 countries with less strong internet WageIndicator also collects salary data on the basis of face-to-face surveys. This data is used for salary indications as well.
Is the wage information reliable?
The wage information used for the calculation of Salary Checks and as presented in Wages in Context is based on voluntarily submitted data. Therefore 100% accuracy cannot and will not be guaranteed. WageIndicator encourages its respondents to provide accurate and precise information about their personal and employment characteristics, pointing out that they provide their professional peers with an improving Salary Check-tool, which they themselves profit from as well. And all along WageIndicator guarantees their anonymity. The Salary Check is updated twice a year. Wages in Context is updated four times a year. Through increasing participation in the Salary Surveys results improve so that they provide the most timely, accurate and actual wage information. In addition, before calculation the dataset is cleaned and compared to other relevant datasets applying universally accepted statistical methods. In this way WageIndicator eliminates from its datasets most non-trustworthy cases, such as for example extremely high or low hourly wages, and highly unlikely combinations such as starters boasting of astronomical earnings etc.
What is an occupation? And what is an occupation group?
WageIndicator recognizes more than 1700 different occupations. Its classification of occupations is based on the International Standard Classification of Occupations (ISCO) provided by the International Labour Organization (ILO). WageIndicator follows the latest classification ISCO-08 released in March 2008, amending it whenever a more detailed classification is necessary. ISCO-08 classification is a tool for organizing jobs into a clearly defined set of groups according to the tasks and duties undertaken on the job. ILO classifies occupations into smaller and larger occupation groups (either 4-digit, 3-digit, 2-digit or 1-digit ISCO code). The smallest occupation groups are referenced with a 4-digit ISCO-08 code. At the top level occupations are clustered into 10 major occupation groups described by the 1-digit ISCO-08 code. For example the occupation group Professionals includes the occupations: Biotechnologist, Aircraft engineer, Translator, University professor in social sciences, etc. Each of these occupations is then broken down into more narrowly defined ones, e.g. University professor in social sciences, into sociologist, politologist, and the like. In addition to these ILO-defined groups WageIndicator defines exact occupations with 13-digit ISCO-08 codes, in such a way that the first 1,2,3 or 4 digits of the 13-digit ISCO-08 occupation code exactly match the ILO-defined occupation groups under which a certain occupation falls.
How many observations suffice for a reliable estimate?
On the country level experience suggests that a minimum of 2000 observations is necessary to get reliable estimates to base the first Salary Checks on for a limited number of occupation groups. We provide such wage estimates only when at least two conditions are met: first a minimum of 10 observations and second, these observations must be statistically reliable. WageIndicator uses modern statistical methods to test whether the estimates are statistically meaningful and sufficient to base the wage profiles in a particular country on. This practice means that all estimates are based on 10 observations or more, which are found to be statistically reliable. Ideally there should be enough reliable observations - 10 minimum - for each of the 1700 exact (13-digit ISCO-08 code) occupations. However, if there are already some but not yet 10 observations for a particular occupation, it may be grouped on a higher level of aggregation in accordance with the ISCO-system: i.e. from the 4-digit up to the 1-digit ISCO-08 code, to the level where the two conditions of minimum 10 observations and reliability are fulfilled. However, one should keep in mind that even though statistically tested, all salary indications are always estimates and therefore include an element of uncertainty.
How does data in a Salary Check differ from official national data?
From the experience gathered since the year 2000 it appears that WageIndicator data are comparable in quality with those from other surveys. However, they offer the additional advantage of becoming available more timely. WageIndicator data are on a half year basis used to calculate and update the online Salary Checks which reflect actual earnings in hundreds of occupations in all countries where WageIndicator has operations. The survey itself is versatile and detailed. Its results can be used to monitor and address significant developments in the labour market as they emerge. However, the survey is not based on a representative sample of the labour force, and therefore no conclusions can be drawn regarding the working population as a whole. In some countries groups in certain wage brackets, or of a certain age, may not visit the Internet as frequently as other groups. This accounts especially for those with very high pay and equally for those who are paid very low. Yet, WageIndicator data is proven to be highly apt for research into the income situation of specific occupational groups in the labor market.
How often are the Salary Check and wages in context updated?
All WageIndicator Salary Checks are updated at least twice a year. The Salary Check is updated more frequently in countries with high inflation rates. Wages in Context is updated four times a year.
What happens with outdated data?
WageIndicator securely stores its data. The presented indicators are always the latest, having replaced the older batch, based either on fresh data, or by indexing data for which no new input is available. The calculation of Salary Checks is based on uninterrupted series of data collected during the last five years.
Is the wage information in the Salary Check and Wages in Context controlled for inflation?
As the he calculation of the Salary Check is based on data collected from the last five years, it adjusts the wage information for the annual inflation rate using the Consumer Price Index of the IMF database. If some latest available Wages in Context figure (apart from living wage) is older than 12 months, it is always adjusted for inflation. The living wage is always based on only recent prices data (the last 12 months), there is no need to adjust these prices for inflation if the inflation rate is close to the international average. However, in countries with an exceptionally high inflation rate the inflation adjustment of all living wage estimates, Wages in Context and Salary Check wage estimates are performed on a quarterly basis.
Which period do the data for the Salary Check cover?
Are overtime and bonuses included?
WageIndicator adjusts calculations for hours worked. Bonuses are not included in the calculation of salaries.
What about the difference between gross and net wages?
The Salary Checks are calculated based on the gross hourly wage rate, computed from gross earnings and the number of hours worked. However, in some countries the proportion of respondents who report only their net earnings is significant. In these cases other statistical techniques are applied to impute the gross earnings.
Why are questions about personal characteristics included in the survey?
Personal characteristics significantly affect the wages individuals earn. Therefore, knowing these characteristics is essential for the calculation of the statistical rules that assign wages to any occupation and worker’s profile. In fact, these state-of-the-art statistical methods allow WageIndicator to predict wages even for workers‘ profiles which are not present in its data. For example, these techniques allow to predict the wage of a plumber of 33, even if no plumber aged 33 shared his data by completing and submitting the survey.
Why is gender important for wages?
Research shows time and again that men and women earn different wages. While some part of the observed differences can be explained by differences in individual characteristics, such as tenure, another part cannot be explained in this way. The aim of WageIndicator is to provide the most reliable wage information for any specific occupation and worker’s profile. By providing reliable information about empirically observed gender pay differentials WageIndicator contributes to a more transparent and - possibly- equitable labor market.
Why is education important for wages?
The worker’s wage profiles in the WageIndicator dataset are also defined by the level of education. In general the level of education determines the productivity of an individual. More educated individuals may be assigned more complex tasks, more responsibility, or simply use their time at work more efficiently. Differences in educational attainment give rise to wage differentials even within the same occupation and for individuals sharing other characteristics. Therefore controlling for education is crucial for the reliability of WageIndicator data.
Why is tenure important for wages?
In general, more productive workers earn higher wages, and more experienced workers tend to be more productive. The reason is that over the years that they are already working they most probably also learned how to perform their tasks more efficiently. However, one typically observes diminishing returns on work experience over time. For example, workers with 20 years of experience may earn 45% more than workers at the beginning of their career, but only 15% more than workers with 10 years of work experience. The wage profiles in WageIndicator therefore are also defined by tenure.
Why is it important for wages whether the employee has a supervisory position?
In general a supervisory job carries more responsibility which workers in such positions are compensated for. Also, typically the most able and productive workers (next to other characteristics) are selected for supervisory jobs. The information about any supervisory job is important as it co-determines the worker’s profile in the WageIndicator.
What is the meaning of minimum and maximum wages?
The minimum wage is the lowest wage reported in WageIndicator data for a given occupation (Note: this figure is not necessarily identical with the national legal Minimum Wage, where it applies). The maximum wage is the highest wage reported in WageIndicator data for a given occupation. As the applied statistical methods also permit predicting wages outside the sample, it is possible, and correct, that in certain cases the wage predicted by the Salary Check is higher than the reported maximum wage, or lower than the reported minimum wage. For example, if for a given occupation all respondents in the data have between 2 and 12 years of tenure, and the profile entered in the Salary Check involves 28 years of tenure, it is well conceivable that the wage corresponding to this profile is higher than any wage, including the reported maximum wage, observed in the sample.
Is the physical beauty of a person reflected in the Salary Check?
Some researchers explored whether appearance matters in occupations where attractiveness is economically important. They found that the beauty premium does not account for the entire wage premium. In most cases the impact of beauty on wages is overestimated and personal characteristics such as self-confidence, diligence or creativity are neglected. In the current version of the Salary Check physical appearance is not reflected in the wage information.
The Salary Check indicates a far higher/lower salary than my actual one. How come?
The Salary Check predicts the expected wage for a given profile of individual characteristics. It answers the question how much can an individual of given characteristics expect to earn. Clearly, the quality of the prediction depends on the accuracy of information entered into the Salary Check. First of all, it is very important to correctly report one's occupation. WageIndicator recognizes some 1700 occupations and although some of the occupational titles are almost similar, sometimes they differ substantially in the tasks and duties. If the wage information in the Salary Check does not match one's current salary, it is possible that one has not chosen the proper occupation. For example, a logistics worker earns much less than a logistics manager. WageIndicator tries to capture the most important determinants of wages, but clearly, discrepancies between one's actual and predicted wages may be due to factors that are not covered by the Salary Check. To illustrate this point, not all female logistics managers with 13 years of tenure and a university degree earn the same salary. If one's salary is higher than that reported by the Salary Check, congratulations are in place for such outstanding perseverance or talent that is rewarded in the labour market but not known to WageIndicator. Conversely, if one's salary is lower than that predicted, this may mean that one works for a company that pays less, but perhaps offers benefits that compensate for the lower pay, such as free kindergarten on the company's premises, or an especially nice team of co-workers. However, it may also be the case that one is underpaid indeed and might consider looking for another job.
The Salary Check does not give my profession, how come?
Try to refine the occupation search. Currently WageIndicator recognizes some 1700 different occupations and works on scaling up to 5000 occupations, making it a truly encompassing tool. However if one's profession is very specialized and unique within a country it may not have been defined in the WageIndicator yet. In that case, please get in touch to have one's occupation included in the Salary Check as soon as possible. Just to get the idea: WageIndicator registers 20 different specific driver’s occupations. Mail: email@example.com .
Can the outcome of the Salary Check be used for a pay rise?
The aim of the Salary Check is to provide the most accurate information about the expected wage for a worker in a specific occupation with a given set of individual characteristics. However the calculation of wage information in the Salary Check does not include aspects such as self-confidence, diligence, creativity, work attitude, and the like. These characteristics are part of one's individual human capital and co-determine one's salary. Therefore the wage predictions from the Salary Check have a great informative value but can be only part of one's input in wage bargaining. However, one may certainly try to make one's employer raise their pay, referring to one's occupational peer group as a benchmark.
How is the median wage calculated?
The median wage is the wage in the middle (when observed wages are sorted into ascending order). Because more people earn low wages than big salaries, the wage distribution is not symmetrical. In countries with high income inequality the wage distribution is highly skewed and the median wage is substantially lower than the average wage. Yet, the median wage as an indicator is not sensitive to outlying values and better expresses the situation of an ordinary worker, which most people are.