Salary differentials

Eurispes – Institute of political, economic and social studies – recently published a study called “Poor worker: inflation has drained wages”. The research incorporated in the book – its editors explain – was based on data compiled by EUROSTAT and ISTAT (Italy’s National Statistical Centre). An analysis of the data furnished by Eurispes enables us to extrapolate with facility the general situation of wages and salaries of all employees of industry and services (so excluding the public administration) of the twelve main European countries. More precisely the study takes into consideration the data for Great Britain, Norway, Holland, Finland, France, Spain, Portugal, Denmark, Belgium, Italy, Germany and Sweden, referred to the five-year period 1999-2004. For some of the aspects of the research the authors also drew on yet more recent data (Eurostat Yearbook 2006-2007) or other sources such as the OECD. Below we give a résumé of the Eurispes findings. STRONG OR SLOW GROWTH. A first striking aspect of the research is the differential in growth of gross salaries over the last six years. On the one hand, there are four countries (Great Britain 27.8%, Norway 25.6, Holland 21.3 and Finland 21.1) that have registered increases of over 20%. On the other – at the bottom of the table – there are four countries below + 16%: Belgium 15.9, Italy 13.7, Germany 11.7 and Sweden 7.7. These are “gross salaries”. Given that the EU average is + 18%, no less than eight of the twelve countries considered registered a lower rate of growth (excluding the public administration that usually has more “generous” dynamics). If on the other hand we compare the average gross salary in the same countries, far more marked differences are registered: using 100 as a benchmark for the average Italian salary that amounted to Euro 22,053 in 2004, Denmark was almost double that figure with an average salary of Euro 42,484 (parameter 193, while – at the opposite end of the scale – Portugal was Euro 12,969 (parameter 59, i.e. almost half). Nine countries were above 100 and only three below: Spain 90, Greece 79 and the already cited Portugal 59. The classification is also influenced by the different incidence of social security contributions: e.g. in Great Britain the worker costs just 16% more than in Italy but his “gross” is 80% higher, due to lower contributions. TAX BURDEN AND FINAL NET SALARIES. Different again is the situation if we compare the total of tax deductions from the salaries of workers with or without wife and children to support: the deductions range from 50.9% of the German ‘single’ to 22.3% of the Irish family breadwinner, so with highly differentiated deductions. The different “family policies” of the various countries also have an impact here. The average band of deductions is around 35-40% for singles and 25-35% for workers with families to support, even though it is interesting to compare the differential, country by country, for the two types of workers. France and Greece have a lighter than average tax burden, while Germany and Holland implement “a more aggressive family policy”. The research holds out some surprises in average net final salaries, in their evolution over time. Between 2004 and 2006 “singles” in Great Britain increased their net salaries from 21,000 to 28,000 euros (+ 33%), but in France only from 18,300 to 19,700 (+ 7%). The greatest increase was in Greece (from 12,400 to 16,720, + 34,5%) while the lowest was in Italy (from 15,597 to 16,242, + 4,1%). The European average was + 15% and over half of the countries considered outstripped that. MEN AND WOMEN, DIPLOMA HOLDERS AND GRADUATES. The Eurispes study also permits the salaries of men and women to be compared. The findings show that the disparities remain and are still surprisingly strong. In Great Britain, for example, a woman earns only an average 64% of what a man earns for the same job and the equivalent percentages rise in other countries as follows: Greece 71, Spain 72, Germany 73, Ireland 76, Portugal 78, Holland 78, Denmark 79, France 80, Italy 80, and Finland 81. The countries most “respectful” of female work are Belgium and Sweden where women earn on average 83% of men. Equality however is still very far from being achieved. As for salary differentials between graduates and those with lower secondary school diploma, over half the countries show that a graduate earns up to 50% more than a non-graduate. The highest differentials are in Portugal (10,000 euros against 31,000) and Germany (24,600 against 61,520); the lowest in Ireland (27,700 against 39,100) and Finland (27,130 against 37,390, i.e. only 30 % less).