FedEE's (Federation of European Employers) seventh annual Pay in Europe 2006 report reveals a yawning pay gap between rich and poor countries in the European Union, with German and Dutch workers earning six times more per hour than equivalent workers in Slovakia.

In terms of real spending power, however, a different picture emerges when holiday bonus payments are added to basic pay, and earnings are adjusted for tax differences and relative purchasing power. In the table below it can be seen that the pay gap between countries narrows substantially once these additional factors are taken into account. Luxembourg also becomes top of the pay league for real net spending power.

Median hourly pay in the private sector for selected European countries: February 2006

Ranking by gross hourly pay	Country	Gross hourly pay (percentage) *	Real net spending power (percentage) **	Ranking by real net spending power
1	Denmark	100	100	2
2	Norway	78	91	5
3	Switzerland	76	98	3
4	Luxembourg	67	106	1
5	Germany	63	83	6
6	Netherlands	58	92	4
7	Finland	53	68	14
8	Ireland	53	77	8
9	Sweden	52	71	11
10	Iceland	50	51	17
11	Belgium	49	66	15
12	United Kingdom	48	77	9
13	France	47	69	13
14	Italy	44	79	7
15	Austria	43	72	10
16	Spain	30	70	12
17	Greece	28	60	16
18	Portugal	18	46	18
19	Poland	13	32	21
20	Hungary	12	29	19
21	Turkey	10	23	22
22	Slovak Republic	10	29	20

* Figures expressed as a percentage of gross hourly pay in Denmark (Denmark = 100)

** Pay inclusive of 13th/14th week payments and holiday pay enhancements, net of tax and social security and corrected for differences in spending power between countries. Figures expressed as a percentage of real net spending power in Denmark (Denmark = 100).

FedEE review of minimum wage rates

In Europe, statutory minimum wage rates range from just 23 euros a month in the Russian Federation to 1,503 euros a month in Luxembourg. In all but a handful of countries, these rates provide a standard of living that is close to, or even below, subsistence levels. Austria, Denmark, Finland, Germany, Italy and Sweden do not operate statutory minimum rates, but nevertheless have binding sectoral collective agreements that jointly cover a high proportion of the working population.

The International Labour Organisation establishes minimum rates for seafarers. This is currently set at $500 US per month.

NOTES:
* Where official rates are expressed by the hour or week, they have been converted to monthly rates on the basis of a 40-hour week and 52-week year. Minimum wage figures are gross (pre-tax) rates and exclude any 13th or 14th month payments that may be due under national legislation, collective agreements, custom or practice.
** Minimum wage levels last updated.
*** Unmarried white collar workers only
# Unskilled workers only
† The terms of this wage order entitle a worker to 13 or 14 monthly payments per year.
†† France: based on statutory 35-hour week
‡ Starting salary in non-unionised sectors (increases after six months' service). Rates apply only in six occupations.

Competitive wage costs
Employers in western Europe looking to save on wage costs are increasingly relocating operations to eastern Europe, Asia and South America.

** Pay in Europe is published annually and contains benchmark pay tables with hourly rates for 32 standard job positions in 48 European countries and territories. .

Federation of European Employers

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