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What is median salary?

Both, experts and ordinary Kazakhstanis, know that the widely known and widely used indicator of the average wage of the country's population poorly reflects the real picture of citizens' incomes. At the end of the 20th century, economists introduced other, more accurate indicators. One of them is the median wage. In this material we will explain what the medial salary is, how it is calculated and how it differs from other types of wages.
What is median salary?

The average wage is calculated by adding up all wages, from the largest to the most modest, and dividing this amount by the number of employees. We get some kind of abstract value, which in practice is related to the real working incomes of individual citizens and groups of the population only conditionally.

The median salary is one of the varieties of the average earnings of Kazakhstanis. The median payout figure means that 50% of workers in the country are paid less and 50% are paid more. It is clear why many experts call the median wage the real average wage, it is due to the average citizen of our country and reflects economic realities much better than the arithmetic average wage.

“Data on average monthly wages are based of quarterly statistical reporting of enterprises. The average value is formed taking into account additional payments, raises, bonuses, as well as taxes and other deductions (income tax, compulsory pension contributions). The median wage is a sum of wages that is at the center of the distribution of number of employees by a sum of accrued wages and divides it into two equal parts, with wages below and above the median,” explains Natalya Belonosova, Director of the Department of Labor Statistics and Living Standards of the Bureau of National Statistics.

Example:

The staff of the company is five people. The CEO receives 600 thousand tenge per month, the salary of other employees: 450 thousand, 200 thousand, 170 thousand, 150 thousand tenge. The median value of wages is 200 thousand tenge, since two employees receive more (600 and 450 thousand tenge), and two have less salary (170 and 150 thousand tenge).

The average nominal wage in Kazakhstan in the 2nd Q 2022 exceeded 312 thousand tenge. The growth compared to the corresponding quarter of 2021 amounted to 24%. The median value of wages was only 196,728 tenge.

“The median salary is considered the most honest indicator of the population's salary, which makes it possible to assess the state of affairs in the country and understand how pronounced social inequality is in terms of income in society. Knowing this amount, it is possible to assess the current state of matters regarding the living standards and build forecasts for further development. Using the median salary, it is possible to find out what problems exist in the labor market; for example, it is used in marketing research of customer demand and for forecasting business development,” explains an expert Ruslan Sundetov.

If we analyze the median salary for a specific period in a particular region, we can understand which cities or regions of Kazakhstan are experiencing difficulties. All this is applicable not only on a nationwide scale but also for the analysis of individual sectors of the economy.

Source: https://prodengi.kz/post/cto-takoe-mediannaya-zarplata

Photos are from open sources.

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