Fair_Wage_VA

How can you determine a ‘fair wage’ for Virtual Assistants from another country?

How much you pay Virtual Assistants depends on where they live and work. If you're hiring from the UK, you can expect to pay anything from £10 to £35 per hour. If you're hiring from the Philippines you will get offers of work anywhere from £1.00 to £10.00 per hour. If you’ve never worked with people from overseas, that may sound absurdly low. 

You may take objection to these low rates? Maybe you think this is ok or akin to slave labour, maybe you think it would be impossible to have a good quality of life on £3.10 per hour?

The intention of this post is to give you enough information to make your own assessment as to what you should pay your international remote workers. After reading this I hope you will be confident that you are not taking advantage of people. Hopefully, you will see that what you are doing is giving your workers and their families a decent quality of life.

While you are reading this, all I ask is that you keep an open mind. Read the whole of this article and if after reading this, you find an issue with our reasoning, I encourage you to share your thoughts and make suggestions as to how we can determine what would be a fair wage, one that provides a decent and happy life for your team. As you’ll read below, we are conducting further research into this ourselves and will publish our findings in due course.

What is a fair and decent wage for Virtual Assistants?

The question of what is a ‘fair’ wage when hiring from abroad is a difficult one to answer. It is also the cause of much-heated debate whenever I post about this subject.

When I started using Virtual Assistants, I began with a UK-based VA on £12.50 per hour, as my company had very little revenue. At that time I was really limited as to how much work I could afford to outsource.

After reading Tim Ferriss’s book, ‘The 4 Hour Work Week’, I got the idea to look further afield to countries where the cost of living is much lower. Therefore, the expected pay rates were less.

After a bit of trial and error, I found a great Virtual Assistant based in the Philippines. 

When advertising the position, I received over 1000 applicants. Many applicants were asking for as little as $1 per hour. I have since learned this is the rate paid by many larger Business Process Outsourcing (BPO) companies. I took issue with these exceptionally low rates. I know from speaking with my current team of 13 full-time Filipino Virtual Assistants, that one can hardly exist on $8 per day!

To figure out what I should be paying, I did some research into the average wages for Filipino Virtual Assistants.

First of all, I looked at the recruitment site I’d used, Online Jobs. https://blog.onlinejobs.ph/comprehensive-guide-to-virtual-assistant-salaries-in-the-philippines,  and Chris Ducker’s blog, author of Virtual Freedom, https://www.chrisducker.com/how-much-do-i-pay-my-virtual-assistant/

Based on these sites, an entry-level wage for a general assistant VA should be about £3.00 per hour. It was a little less when I started a few years ago, so this is what I paid in the beginning. 

After some lengthy discussions with our team, we reviewed our wage rates earlier in the year. We now have a basic starting wage of £3.10 (£3.30 after 4 weeks probation) and we pay considerably more for experienced staff.

I recently posted on Facebook to encourage people to start using Virtual Assistants. In that post, I stated what we currently pay. I had a mixed response, and some people were strongly opposed to paying someone so little. 

This prompted me to do some further research. I wanted to be sure I was paying enough to give people a decent quality of life. I don’t want people working for me to be just surviving day-to-day. I want them to have enough income to enjoy their lives and support their families.

Here’s what I found doing some preliminary research:

At the time of writing (August 2019), The Philippine Statistics Authority (PSA) currently pegs the day-to-day poverty threshold at Php9,063.75 a month for a family of five. This equates to just £141 (€155) per month (for the entire family). However, there is much debate about this being insufficient to provide even a basic living wage above the poverty line. 9 out of 10 families in the Philippines are currently below this poverty line.

In order to know what amount of household income is enough to provide a family with a decent quality of life requires far more data than simply looking at the average earnings and the relative cost of living. For the Philippines, where our team is based, this research has been done by IBON. They ‘seeks to promote an understanding of socio-economics that serves the interests and aspirations of the Filipino people’, https://www.ibon.org/about/

They suggest a more realistic minimum household income. For a family of 5, this is PHP23,660, or £370.20 (€407.22) per month, including bonuses.

https://www.ibon.org/family-living-wage-for-a-family-of-five-members-in-ncr/

However, The National Economic and Development Authority (NEDA) has recommended that PHP42,000 or £650 (€715) per month is “a decent income". This is for an average household of 4.4 people https://www.ibon.org/time-for-govt-to-come-up-with-realistic-poverty-threshold-ibon/

Our entry-level wage for an unskilled, general admin role for a full-time Filipino contractor is about £3.10 per hour. This then rises to £3.30 after a 4-week trial period. This equates to £528 (€580) per month. We also give an 8% Christmas bonus, 20 days paid holiday and some additional benefits such as maternity pay. We give inflation-linked pay rises as standard and a performance review linked rise every 6 months. 

This means, that even if the new trainee is the sole earner in a family of 5, they are above the recommended minimum household income of £370.20 (€407.22).

Once our Virtual Assistants have been with us for 12 months, they would typically be on more than £4.06 per hour or £650 (€715) per month (due to promotions and pay rises). Therefore, on their single income could support an average-sized family. 

You can see all our wage bandings here: http://bit.ly/SAO-Wage-Banding

Sample of wages and hourly rates

Below you’ll find a sample of wages, hourly rates and relative cost of living in EU member states. I was surprised to see the seventeen-fold difference between the highest and lowest hourly rate within the EU! 

Sample-wages-and-rates
Sample Wages and Rates

Data from: https://ec.europa.eu/eurostat

Hourly Earnings: https://screencast.com/t/O1vlSAOMvP

Minimum Wages: https://screencast.com/t/uNsvMqhZVL1

Gross Salary: https://screencast.com/t/rCLCvyac0

^This is the recommended minimum living wage as the official minimum wage has been criticised as being unrealistically low

^^This is the recommended Living wage for a family of 5

^^^The idea of including the final column was to give the means to compare the relative wealth of countries. I have simply divided Household Income by the Cost of Living.

Cost of living index from https://www.expatistan.com/cost-of-living/country/ranking

* A Price Index of 134. That means that living there is 34% more expensive than living in the Czech Republic’. See the full explanation here: https://www.expatistan.com/cost-of-living/country/ranking#price-index-explanation

The point of including this table is to show what one needs to get paid, to have an average quality of life and how that it is relative to where you live. 

This doesn’t mean that a Bulgarian on €1.67 per hour enjoys the same quality of life as a Swiss resident on €29.46. On the contrary, simply by looking at the relationship between hourly rate and cost of living cost index one can see a disproportionately low wage in the poorer countries. This suggests that those people have less disposable income after paying for life’s essentials (last column).

However, if you lived in Switzerland and employed someone living in Bulgaria and then paid them €29.46 per hour, that person would have a disproportionately high quality of life. This is due to the relatively low cost of living in Bulgaria compared to Switzerland. 

Similarly, if you live in the UK and advertise a Virtual Assistants job at €14.81 per hour, which is the national average wage, you’d have a pretty tough job of convincing anyone living in Switzerland to apply. Conversely, your average Bulgarian, living in Bulgaria, would jump at the chance of earning €14.88!

The final column is simply the household income divided by the cost of living. This is an arbitrary number and is not proof of anything, but it does suggest that the relationship between household income and the relative cost of living is disproportionate for countries where the average income is lower. This suggests that it may be harder to have a decent quality of life in these countries, despite the low cost of living. 

This concerns me as we want our team to enjoy life and not just survive. We are conducting an independent research project into determining what constitutes a fair and decent wage for a typical Filipino VA. For example, we want to know if the wage we pay an individual VA should be sufficient to support their entire family or is it fair to assume there would be more than one earner in the household? There are many other questions we want answers to, and we’ll publish all our methods and findings.

We aim to publish the results in early 2020 and will amend our wages and recommendations if needed.

By providing what we believe is a fair wage so our Virtual Assistants can have a decent quality of life, we have been able to provide a stable, regular income to 13 people in one of the poorest countries in the world. This number is set to double in the next 6 months. If I had decided to hire within the UK, I would probably still be stuck with one, part-time VA. This is because I simply wouldn’t have been able to grow the company at the same rate. 

In summary,

Using the data currently available to us for the Philippines, we recommend aiming for a family household income of at least £650 per month (including bonuses). This is for entry-level work. Therefore, we believe that our current base rate of £528.00 per month (not including 8% Christmas bonus) per person is fair. We’re also proud to have 2 families within our team where we employ two family members. Therefore, their household income is more than £1000 per month.

I hope you found this useful and welcome your comments and suggestions for our research project.