On the basis of prices for a standardised basket of 122 goods and services, Oslo, Tokyo and Zurich are the most expensive cities in the world, according to UBS’ Prices and Earnings study.

Add rents to the basket and New York, Hong Kong and Dubai stand out as the most costly places to live. Comparably, the cost of living is lowest in the Indian cities of Delhi and Mumbai.

Workers in Zurich, Geneva and Copenhagen earned the highest gross wages. However, after taxes and social security contributions, Luxembourg overtakes Copenhagen. Delhi and Mumbai sit at the bottom of the earnings rankings, where workers receive around six per cent of the average Zurich wage.

How far pay stretches

Salaries stretch farthest in Zurich, where the net hourly wage buys the most goods and services. But, how much a wage is worth is "best described by comparing purchasing power in relation to goods that are as homogenous as possible around the globe,” UBS explained.

For example, in Tokyo it takes nine minutes of work to earn enough to buy a Big Mac, while in Nairobi it takes 81 minutes. Meanwhile, workers in Zurich can buy an iPhone after 22 hours of work, but in Manila it takes around 20 times longer.

At over 2,000 hours per year, people work the most in Asia, Africa, the Middle East and South America. Workers in Europe enjoy the shortest working hours and highest number of days of paid vacation.

Interestingly, of all the cities surveyed in South America, workers in Mexico City receive the lowest number of paid days off - an average of six per year. Their colleagues in São Paulo and Rio Janeiro on the other hand have an annual vacation entitlement of 30 days on average.

Overview of regions

• North America

In terms of purchasing power, all US cities rank higher than Toronto and Montreal, which the firm said can be attributed to the fact that net hourly wages are typically 20 per cent lower in these Canadian cities.

“Even though prices in the US are higher than the global average, prices for electronic and household goods are very attractive in North American cities, with Miami and Los Angeles boasting the best deals in international comparison,” the report said.

• Asia-Pacific

The discrepancy between prices and wages within an individual region is most evident in Asia. Food costs five times as much in Tokyo than it does in Mumbai, although wages in Tokyo are twelve times higher than in Delhi.

In terms of net hourly wages, there is no one Asian city at the top of the domestic purchasing power rankings. However, Sydney has the second highest domestic purchasing power in an international comparison.

• Europe

Prices for goods, services and wages are, on average, 36 per cent lower in Eastern Europe than in Western Europe. However, this is “more than offset” by the fact that workers in Western Europe are paid at least three and a half times more than their Eastern European neighbours, the firm noted.

• Switzerland

While one will find the highest price levels in Zurich and Geneva, workers there also receive the highest wages. The purchasing power of Zurich and Geneva is around 30 per cent higher than in the “similarly expensive” cities of Oslo and Tokyo.

The Prices and Earnings study, the fifteenth of its kind, examined wage purchasing power in 72 cities globally. Data collected for each country in local currency was converted into a single, common currency.