Buying power of UK salaries remains competitive despite Brexit uncertainty.
Switzerland enjoys highest entry salary in Europe.
Entry-level professionals in the UK earn a gross base salary of £22,242, which ranks only as the 13th highest among the top 21 European economies, according to Willis Towers Watson’s latest Global 50 Remuneration Planning Report. The report also examines the tax burden in each country, as well as the cost of living, to establish how much buying power employees get from their pay. This measure gives a ‘purchasing power’ comparison between different countries and an indication of what an employee’s net income will provide within their country of residence.
When this is taken into account, salaries for UK employees look more competitive as lower taxes and cheaper living costs make the country more affordable than many of its European neighbours. Once adjusted for purchasing power parity (PPP) to account for taxes and living costs, the wage of a typical entry level professional in the UK becomes £22,165, which sees the country climb five places to 8th highest in Europe, surpassing Norway, Denmark, Sweden and France.
Middle managers enjoy similar relative strength in their pay levels. The typical middle manager in the UK earns £58,833 gross a year, putting them in 10th spot in Europe, and that ranking lifts to sixth place and £42,690 on a PPP-adjusted basis. Only middle management staff in Luxembourg, Switzerland, Germany, Belgium and Ireland enjoy greater buying power than their counterparts in the UK.
“The UK’s improved performance in the rankings, when purchasing power is taken into account, demonstrates the positive impact of a lower tax and cost-of-living burden on cash compensation in the UK compared to much of Continental Europe,” said Hazel Rees, GB leader for Willis Towers Watson’s Rewards Line of Business. “This approach is also a driver behind some common differences in reward design practised in the UK versus the rest of Europe, such as the use of car allowances instead of grants and the comparatively lighter use of voluntary fringe benefits.
“If UK companies are to stay competitive, however, available resources need to be better allocated in order to attract, motivate and retain their best employees as market conditions create increased competition for talent,” she added. “While salary remains the main consideration for UK workers when deciding to join or stay with a company, our own research shows that employers continue to fall short in how they deliver pay programmes, including base pay and bonuses.”
Switzerland was the country with the highest salaries across all levels, with base salaries of £53,024 for entry level professionals and £97,929 for middle management roles. Despite wages being substantially adjusted downward when taxes and the cost-of-living are factored in, Swiss workers still have higher buying power than nearly all other Europeans, at £35,069 for entry level staff and £57,522 for middle managers.