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A very interesting article in Euronews points out where the highest and lowest salaries are in Europe.
It is interesting that Hungary, Greece and Slovakia are placed at the bottom, which is understandable, but still, even in these financially weaker countries, salaries are higher than those in Bulgaria and Romania.
This immediately provoked a discussion on the social network.
“Wow, apparently Bulgaria and Romania are not in Europe and the EU”
“Classic… I wonder if *we* are off to boost the stats “
“I looked at the original data you cite.
Yes, we are not present there. At the expense of ShSwitzerland, Norway and Great Britain.
Why? Because the statistic is titled “Average annual salaries for SELECTED EUROPEAN COUNTRIES in 2022”
And here is the whole article.
How do average salaries in Europe compare? Euronews Business takes a closer look at the countries that reward employees the most.
EU regulations for employees are generally quite strong with a focus on individual working conditions and employment rights, including the right to information, anti-discrimination laws and workplace safety.
However, when it comes to wages and salaries in EU member states, there are still significant differences depending on a number of factors, such as laws, demand, inflation and more.
How countries in Europe compare in terms of pay
According to Statista, in 2022 average annual salaries ranged from €73,642 in Iceland to €24,067 in Greece.
The countries with the highest payments in 2022 are Iceland (€73,642), Luxembourg (€72,529), Switzerland (€67,605), Belgium (€63,758) and Denmark (€59,405), while the lowest the payers are Greece (24,067 euros), Slovakia (24,337 euros), Hungary (26,376 euros), Portugal (29,540 euros) and the Czech Republic (30,967 euros).
According to Eurostat, the average hourly labor cost in the EU was 30.5 euros. Average annual wages for single employees without children are €26,136. Working couples with two children earn an average of €55,573 per year.
The unadjusted gender pay gap was 12.7% in 2021, with the largest gap in Estonia at 20.5% and the smallest in Luxembourg at -0.2%. However, according to the European Commission, the pay gap will increase by 13% in 2023.
What is the EU doing to tackle the pay gap?
Back in 2020, the European Commission announced a strategy to try to close this gap by 2025. This was followed by the launch of the Pay Transparency Directive by the Commission in June 2023, with a €6.1 million fund to support implementation on the same. This makes it easier for employees to recognize pay discrimination. It also functions as a guideline for employers.
Generally, the highest paying sectors in Europe are finance, insurance, electricity, mining, information technology, retail and education. On the other side of the spectrum, the lowest paying sectors tend to be administrative support, hospitality and construction.
What drives high wages in Iceland and Luxembourg?
Iceland’s high wages are due to much of the country’s private sector relying on collective agreements. Some increases were also due to the addition of Covid-19 benefits, as well as a rebound in hourly wages after weakness during the pandemic.
Iceland is also one of the most expensive countries in the world, with persistently high inflation, which also contributes to workers demanding higher wages. As of March 2019, 326 Icelandic labor contracts have been signed, with over 90% of the workforce part of a union.
The financial and banking sector is the main force behind the attractive salaries in Luxembourg, with most banks employing highly educated, experienced and in-demand workers. Some of them are also foreigners.
Luxembourg also reviews its minimum social wage against average wages and price movements every two years, thus keeping pay standards very up to date. However, salaries largely depend on sectors, bank divisions, seniority, age, as well as education and experience.
This can lead to significant differences, even within the same sector, depending on the specific role and position of the employee. As such, average wages have been more or less flat in Luxembourg since 2015 as productivity has declined.
Lower taxes and a thriving banking and financial sector
The job market in Switzerland also shares much of the same offerings as Luxembourg, as both countries are primarily supported by the banking and financial services sector. However, Switzerland also has much lower taxes than the rest of Europe, averaging around 20% to 35% for the CHF 150,000 to 250,000 bracket.
Belgium is also betting heavily on wage indexation for both white-collar and private sector workers. The country saw its highest indexation in 50 years in 2022 as rising inflation and out-of-control energy prices weighed on workers’ purchasing power.
Meanwhile, Denmark has a somewhat unique labor market model that depends on a balance between flexibility and security. This allows the country to have no set minimum wage, instead allowing employees and employers to reach their own wage agreements.
At the same time, there are fewer laws regarding dismissals, and the litigation challenging them is also quite few. However, employees are not left out. They have unemployment insurance funds that they can contribute to while they are working. This provides them with unemployment benefits for up to two years in case they later lose their job.
Why are salaries in Greece so low compared to others?
Greece’s economy and labor market as a whole are still struggling to recover from the sovereign debt crisis, resulting in far lower average wages and minimum wages than the rest of Europe. A number of tougher labor market measures have also recently been implemented, such as incentives to hire younger, fresh graduate trainees who may be paid less.
Similarly, Slovakia also struggles with low labor productivity and the fallout from the collapsed Soviet regime, which keeps wages low.
Portugal also faces low productivity as well as a growing trend to hire short-term seasonal workers to bolster the country’s tourism sector. Lower wages have also done a lot to price out a number of people in the booming real estate sector.
Hungary’s tech recession may have contributed to lower wages recently, as fewer companies have been able to afford labor costs. Historically, however, Hungary’s low cost of living may have been a key factor in the weak upward movements in wages, although this may be slowly changing now that the country is facing higher inflation.
On the other hand, the Czech Republic faces a more cultural problem with the majority of employees hesitant to negotiate for higher wages. As a result, even the unions are weaker than they should be and unable to do much to promote the workers’ agenda.