Pay for UK professionals starting out in the world of work remains considerably below the Continent’s highest-wage markets, according to Willis Towers Watson’s latest Global 50 Remuneration Planning Report. The typical entry level professional in the UK earns £26,000, which is only the 14th highest out of the top 20 European economies.
This is just over a third of the £68,959 employees in top-ranked Switzerland can expect and slightly more than half the £45,194 young professionals in second-placed Denmark can expect to earn.
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 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. For example, while the results showed that the typical entry level worker in UK earns a gross base salary of £26,000, when that figure is adjusted for purchasing power parity (PPP) to account for taxes and living, the wage becomes £29,739, making it the 8th highest in Europe, placing it above Denmark, Norway, France and Sweden.
Middle managers enjoy an even more marked increase when their salaries are adjusted for purchasing power. The typical middle manager in the UK earns £69,480 gross a year, putting them in 10th spot in Europe. But that ranking leaps to fourth place and £57,129 on a PPP measure. Only middle management staff in Switzerland, Luxembourg and Germany are better paid than their counterparts in the UK.
Tom Hellier, UK Practice Lead, Rewards at Willis Towers Watson, said: “Although dependent on prevailing exchange rates, this data shows that from a cost perspective the UK remains relatively attractive for business compared with European peers. However, staying open to talented workers with fast-growing emerging economies will be critical to realising the UK’s long-term growth potential and employers also 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.”
Switzerland was the country with the highest salaries, driven largely by gross pay levels. Employees enjoy a gross base pay around 50% higher than the second-placed countries, and substantially more than UK rates, with £68,959 for entry level and £125,890 for middle management roles. Despite wages being substantially adjusted downward when taxes and the cost-of-living are factored in, Swiss workers still have a higher buying power than all other Europeans, at £47,202 for entry level staff and £77,963 for middle managers.
Tom Hellier said: “Increasing competition for talent, amplified by medium-term uncertainty from Brexit, highlights the need for organisations to position themselves as an employer of choice and look at the overall perceived value of their offer. Enhancing the non-financial aspects of the deal such as career-advancement opportunities, learning and development programmes and flexible-work arrangements are key to improving retention and ensuring companies remain competitive across the region.”