What is the Average European Salary?

The average salary of a country is an indication of how well the country's economy is doing. If the average salary of a country is high, it generally means that employees of this country are better paid than employees of a country with a lower average. However, this is not always the case as there are factors that could affect the average salary of a country.

Not Always Apples to Oranges

While it may seem easy to obtain data on average salaries of European countries, it should be noted that there are other factors to take into consideration when you try to calculate the average salary. You should note that not all European countries use the same currency, so it can be quite difficult to standardize all the rates. However, for the sake of simplicity, we can use Euros in our calculation.

The European Average

In 2013, studies have shown that the average salary across the European countries is set at 1,916 euros per month. In this particular study, it is of note that Spain falls below the European average - at only 1,615 euros per month. Norway, on the other hand, tops the list with an average salary of 3,644 euros.

Countries with average salary that exceeded the average European average include the United Kingdom, France, Germany, and Norway. Countries with average salary that is below the European average include Portugal, Ireland, Cyprus, and Greece. From the same study, the results show that full-time employees have grown their purchasing power by 1.8% since 2008. However, the purchasing power of part-time employees has dropped by 2% in the same period.

In addition, the study also indicates that people who work for larger companies have a higher average salary than someone who holds a similar job, but in a smaller company. The discrepancy could be as high as 47%!

Other Employee Benefits

Nowadays many employees opt for an overall compensation package that goes beyond the basic monetary compensation. In a way, a full salary package is a restructured income that allows employees to enjoy great savings by paying less income tax. How? A full salary package is composed of monetary compensation and other employee benefits, such as car allowance, housing allowance, education allowance, childcare allowance, etc. Employees opt to receive a lower monetary compensation in place of other employee benefits. In effect, these people may seem to have a lower salary but when combined with the monetary equivalent of their benefits, their compensation may actually be more valuable than people who earn a higher salary.

This new way of compensation may skew the average salary because in some studies, the monetary equivalent of employee benefits is not taken into consideration when computing the average salary. This would result in outlying data that could lower the overall average. In other words, a country where salary packaging is very popular may have a low average salary but this doesn't mean that employees in this country are undercompensated for their efforts.

More than Just the Salary

While the average salary is a pretty good indicator of what a country's economic situation is, it doesn't tell the whole story. What people get paid is not necessarily what they take home because the income tax rate of a country affects an employee's take home pay. Moreover, we also have to take into consideration the cost of living in these European countries. If you live in an expensive country, then despite having a higher average salary, your purchasing power may not be as high as someone with a lower salary but live in a cheaper country.


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