Taking purchasing power standard (PPS) into account, the gaps in average annual full-time salaries across the EU are narrower than in nominal terms, though significant differences persist. Euronews Business investigates.
Have you ever wondered which countries pay the best in Europe? Or how your salary stacks up against others across the EU? With living costs varying widely, how does your salary compare when adjusted for purchasing power standards?
There are various indicators for comparing salaries and earnings, but Eurostat’s new calculation, the average annual full-time adjusted salary per employee, stands out as particularly useful. It is estimated from the average annual gross salary for a full-time job.
According to Eurostat, in 2023, the average annual full-time adjusted salary per employee ranged from €13,503 in Bulgaria to €81,064 in Luxembourg, with the EU average standing at €37,863.
Nine member states reported salaries above the EU average, while 17 countries fell below. The Netherlands is not included in the data due to differences in methodology.
In addition to Luxembourg, the adjusted average salary was above €50,000 in five more countries. They included: Denmark (€67,604), Ireland (€58,679), Belgium (€57,989), Austria (€54,508) and Germany (€50,988).
Finland, Sweden, and France are also ranked above the EU average.
At the bottom, Bulgaria is followed by Hungary (€16,895), Greece (€17,013), Romania (€17,739), Poland (€18,054), and Slovakia (€19,001), all with annual salaries below €20,000.
Italy and Spain fall below the EU average, with annual salaries of approximately €32,500.
Average salaries in purchasing power standard (PPS) provides a more fair comparison as living costs, particularly housing expenses, vary significantly across European countries.
Purchasing power parity (PPP) :eliminates the effect of price level differences across countries”. PPS is “an artificial currency unit”, where one PPS unit can theoretically buy the same amount of goods and services in each country.
When examining the average annual full-time adjusted salary per employee in PPS, the gaps are notably narrower compared to nominal figures. However, substantial differences remain across the EU. For example, in nominal terms, the highest average salary was six times the lowest, whereas this ratio decreases to 2.5 times when adjusted for PPS.
The average annual full-time adjusted salary per employee, measured in PPS, ranged from 20,525 in Greece to 53,745 in Luxembourg. In nominal figures, Greece ranked third from the bottom, but it had the worst score in PPS.
In this indicator, only seven countries exceeded the EU average. Apart from Luxembourg, Belgium, Denmark, Germany, and Austria reported salaries above 45,000 PPS.
Ireland and France were the other two countries above the EU average, with PPS salaries of 41,581 and 39,110, respectively.
Italy had the lowest salary among the EU’s ‘Big Four,’ at 33,723 PPS, while Spain recorded a slightly higher figure at 35,774 PPS, both remaining below the EU average.
ADVERTISEMENTAnalysing both nominal and PPS salaries, the following key findings emerge:
Northern and Western Europe consistently lead average salaries, but their advantage narrows in PPS-adjusted rankings
Eastern Europe improves slightly in PPS, but average salaries remain significantly lower than the EU average in these member countries
Southern Europe struggles in both metrics, with low wages and limited purchasing power.
Among the 26 EU countries, the average annual full-time adjusted salary per employee decreased only in Sweden between 2022 and 2023. In Sweden, the average salary dropped by €1,817, reflecting a 4% decline. However, this decrease is due to the conversion of the Swedish krona to euros; in local currency, salaries slightly increased.
In the EU, the salaries rose by €2,225 or 6%.
In nominal terms, Luxembourg, Belgium, and Ireland saw the highest increases, each exceeding €4,000, while average salaries in Malta, Greece, and Italy grew by less than €1,000.
ADVERTISEMENTLooking at the changes in percentages, Romania, Hungary, Poland, Latvia, and Croatia recorded the highest increases, with average salaries rising by more than 15%.
In contrast, the increases were below 5% in Malta, Italy, Greece, Denmark, Finland, and Cyprus.
Eurostat began calculating the “average full-time adjusted salaries per employee” following the adoption of the Blue Card Directive in 2021. This metric serves as a threshold for granting work permits to high-skilled workers at the national level. According to Eurostat’s metadata: “Practically, the indicator represents a salary sufficient to live decently in a Member State.”
The salary is adjusted by converting part-time salaries into gross full-time equivalents. Part-time work remains a significant trend in Europe. In 2023, 17% of employees aged 20-64 in the EU worked part-time according to Eurostat. This proportion was even higher in some countries, such as Germany at 29% and the Netherlands at 39%.
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