A new study1 from Glassdoor® Economic Research suggests that Britain offers a below average standard of living compared to other countries in Europe, with middling wages and high costs.
The report, titled “Which Countries in Europe Offer The Best Standard of Living?”, conducted in cooperation with Llewellyn Consulting, finds that when ranked in order, the countries offering the highest standard of living are Switzerland, Denmark and Germany. The UK appears way down the list, but ahead of nations such as France, Spain, Italy and Portugal. The study presents an analysis of how wages differ across Europe and identifies countries in which the cost of living is the most (and the least) favourable. The analysis covers 18 countries and tracks how these European markets compare to the United States, which is used as a benchmark.
“When it comes to compensation, a larger pay packet isn’t always better. What matters is the ability to afford useful things that enrich our lives,” said Glassdoor’s Chief Economist, Dr. Andrew Chamberlain. “Average wages vary considerably from one country to another but the gap between take-home pay and price levels has more relevance to the man on the street. A low cost of living, as you would find in Greece and Portugal, doesn’t count for much if average wages and purchasing power are similarly low.”
Average (Nominal) Wages
There is considerable disparity within Europe in terms of what people are paid and nominal wages in the highest paying country (Switzerland, €72,000) are around five times those of the lowest (Estonia, €13,000). Average wages in the UK, along with Belgium, Sweden, Finland, Austria, at around €41,000, are similar to those in the U.S.
Cost of Living by City
One way of accounting for cross-country differences in prices is to consider differences in price levels in major cities, against which New York City is taken as the benchmark. The cost of living is highest in Geneva and Zurich, which are the only two main European cities that are more expensive than NYC (by 3 percent and 1 percent, respectively). Next comes London, which has the highest rents in Europe, but nevertheless is around 7% cheaper than NYC. Cost of living is lowest in Tartu, Porto, Thessaloniki, Tallinn, Athens, and Lisbon, which are some 60 percent - 70 percent cheaper than NYC.
UK in Bottom Half of Europe for Standard of Living
Taking together both the income (after income tax) and the price-level (including VAT) it is possible to derive a local purchasing-power-based standard of living. This is (again) highest in Switzerland, followed by Denmark and Germany, despite the latter two countries not appearing in the top three for Average Wages on a “Purchasing Power Parity” (PPP) basis. This suggests that wages might not be the highest in either Denmark or Germany, but they go a relatively long way in terms of what you can buy with them. The UK comes 10th in Europe, yet is only just behind Germany in terms of average wages on a PPP basis, suggesting that take-home pay in Britain gets hit harder by high cost of living and tax than in Germany. The UK sits behind Ireland and Austria, but ahead of France, Belgium, Spain and Italy. Portugal Greece and Estonia come bottom of the table.
www.glassdoor.co.uk
1 Report findings based on data from OECD and Numbeo