Average salaries across Europe vary greatly, with significant differences in both pay and the cost of living. In 2023, countries like Luxembourg and Switzerland led the way in terms of high earnings, while others, particularly in Eastern Europe, had much lower figures. How do these salaries compare when adjusted for purchasing power standards? Let’s take a closer look at the figures and factors behind salary differences across Europe.
Highest Salaries in Europe
In 2023, Europe saw a wide range of salaries across its countries. The average full-time adjusted monthly salary varied from €1,125 in Bulgaria to €6,755 in Luxembourg. The average for the European Union (EU) stood at €3,155.
Denmark, with an average of €5,634, is the only EU country, besides Luxembourg, where salaries exceed €5,000. Close behind are Ireland (€4,890) and Belgium (€4,832), offering high earnings as well. Austria (€4,542), Germany (€4,250), and Finland (€4,033) also offer salaries above the €4,000 mark.
However, not all countries are on the same level. Around 10 of the 26 EU countries report an average salary below €2,000. In four of these, the average salary is under €1,500. Poland, for example, reports an average salary of €1,505, while Romania, Greece, and Hungary average around €1,400.
Germany Leads Among Large Economies
Among the EU’s largest economies, Germany has the highest average salary at €4,250, followed by France (€3,555). Italy (€2,729) and Spain (€2,716) lag behind, both coming in more than €400 below the EU average.
Comparison with Non-EU Countries
When comparing EU salaries with non-EU countries, Switzerland takes the lead with an impressive €8,104 average salary. Other European Free Trade Association (EFTA) countries, like Norway, also have high salaries, with an average of €5,027. The UK, though outside the EU, comes in with an average salary of €4,220.
The Netherlands, with €4,629, also ranks among the top-paying EU countries.
At the opposite end of the scale, Turkey, which is an EU candidate country, has the lowest average salary in Europe at €873, below the €1,000 mark.
Purchasing Power Adjustments
When adjusting salaries for purchasing power standards (PPS), the differences in pay across Europe become less dramatic but remain significant. Purchasing power standards account for price level differences, allowing for a more accurate comparison of living standards between countries.
In nominal terms, Luxembourg remains the highest-paying country, followed by Denmark, Ireland, and Belgium. However, once adjusted for PPS, the gap narrows, with Luxembourg still at the top (€4,479 PPS) and Greece at the bottom with €1,710 PPS.
Countries like Belgium (€4,038 PPS), Denmark (€3,904 PPS), Germany (€3,898 PPS), and Austria (€3,851 PPS) maintain their positions among the highest-paying in the EU, even after considering the cost of living.
Rising Salaries Over Time
Between 2018 and 2023, average salaries across the EU increased by 19%, with a rise of €507 per month. Luxembourg saw the most significant increase, adding €1,291 to its monthly salary. Lithuania also saw an impressive rise of €1,141.
However, some countries experienced slower growth. In Spain, for example, salaries rose by 19%, while Italy saw only a 10% increase. In contrast, Lithuania’s salary growth was remarkable at 102%.
The increase in salaries was more substantial in countries with lower starting points. In Greece, for instance, the average salary increased by just €91 per month, while in Luxembourg, it jumped by €1,291.
Factors Behind Salary Disparities
Dr. Sotiria Theodoropoulou, the head of the European Economic, Employment, and Social Policies Unit at the European Trade Union Institute (ETUI), explains that higher wages are often linked to productivity. More industrial and financial activity usually correlates with higher wages, and countries with high-tech industries often have a more productive workforce.
Dr. Theodoropoulou also points out that strong labor market institutions play a role. Countries with robust collective bargaining systems and policies that offer workers more “outside options” tend to see productivity gains reflected in higher wages. These systems ensure that workers can negotiate better pay and benefits.
Which Countries Have Seen the Biggest Salary Increases?
Among the EU countries, Lithuania saw the largest rise in salaries over the past five years, with a staggering 102% increase. Other countries that saw significant rises include Latvia (50%) and Estonia (42%).
In contrast, the salary increases in larger economies like Spain, France, and Italy were more modest. Spain saw a 19% increase, Germany 18%, France 14%, and Italy only 10%. Nordic countries, along with Greece and Cyprus, experienced slower growth compared to the EU average
