UK employees are the lowest paid across most job levels compared to other European countries, according to research by Towers Watson.
Its Global 50 remuneration planning report found that base salaries for entry-level professionals and experienced administration staff are particularly low in the UK, ranked 15 out of the top 16 European economies, and standing nearly three-times lower than equivalent salaries in Switzerland.
The research also found that UK wages for experienced professionals and middle managers are slightly more competitive, ranked at 13 and 10, respectively, out of 16 European countries.
UK pay lags significantly behind countries such as Belgium, Germany, Ireland, the Netherlands and Switzerland.
Tax position
The research also analysed 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 sit in sixth position and middle managers climb to fourth place for purchasing power, above France, Italy, the Netherlands and Spain in both cases.
Highest paid
The research found that 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 the 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 among the lowest-paid workers with some of the lowest levels of buying power as well.
Darryl Davis, senior consultant in the data services team at Towers Watson, said: “The results of our 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.”
Chris Charman, director of the reward practice at Towers Watson, added: “Although dependent on prevailing exchange rates, this data shows 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.”
