UK employees sit towards the bottom of the European pay league across most job levels, according to the latest study by Towers Watson’s Data Services practice. Base salaries for entry-level professionals and experienced administration staff are particularly low in the UK, ranking fifteenth out of the top 16 European economies, and nearly three times lower than equivalent salaries in Switzerland.
Further up the career ladder, UK wages for experienced professionals and middle managers are slightly more competitive, placed thirteenth and tenth respectively out of 16 European countries. For all three levels, UK pay still lags significantly behind countries such as Germany, the Netherlands, Ireland, Belgium and Switzerland according to Towers Watson’s Global 50 Remuneration Planning Report.
Darryl Davis, senior consultant in Towers Watson’s Data Services team, said: “The results of our Global 50 report suggest that Continental European wages have been less severely suppressed over the past few years than in the UK. This may be due to stronger unionisation for employees in many European countries.”
The report also analyses the tax burden in each country, as well as the cost of living, in order to establish how much ‘buying power’ employees enjoy from their pay. This measure gives an indication of what an employee’s net income will provide within their country of residence. When these measures are taken into account, the salaries for UK employees look more competitive. Due to lower taxes and cheaper living costs than in many other European countries, entry-level professionals in the UK move up to sixth and middle managers climb to fourth place for purchasing power, above France, the Netherlands, Spain and Italy in both cases.
Elsewhere in Europe, Swiss employees top the pay tables consistently across all job levels with salaries between 25% and 40% higher than even the second-placed countries. As a result, even when taxes and cost of living are taken into account, Swiss workers are still better off than any other Europeans. At the other end of the scale, Portuguese employees are consistently found to be amongst the lowest paid workers with some of the lowest levels of buying power as well.
Chris Charman, director of Towers Watson’s Rewards practice, said: “Although dependent on prevailing exchange rates, these data show that from a cost perspective the UK is relatively attractive for business compared to European peers. Moreover, despite a common labour market in the EU, it is striking to see how divergent base pay levels remain across the Continent. But employers need to be mindful of the total package; for example in some countries such as the UK, annual bonuses play a more prominent role in addition to base pay.
One explanation for this is that annual bonuses often play a more prominent role in topping up pay packets in some countries, such as the UK, than in others.”