Europe Map Image by WikiImages from PixabayBoundless, a leading employer of record in 25 countries, has published a report that compares 32 different European countries in terms of employment cost and take-home pay. Decoding Employment Costs in Europe is available in web format and a PDF, with a supporting infographic. Enterprise Times had access to the PDF. It is, however, unclear where to download this from.

The report runs to 13 pages and combines textual analysis with data visualisations. The report analyses the take-home pay and employer cost for employees with salaries of €60,000. It also looks briefly at higher salary rates of €100,000 and €250,000.

The report analyses the following categories:

  • Estimated Total Employment Cost by Country
  • Estimated Employee Net Pay by Country
  • Employer Contributions Compared to Net Pay Over Total Employment Cost
  • Cost-to-Pay Comparison (looks at higher salary bands)

The report ends in a conclusion that reveals that expanding internationally has more complexity of choice than one might expect. A €60,000 salary has a very different impact on employees and employers across different countries. Which can also make the idea of equal pay for equal work a harder principle to maintain. Do organisations consider national weighting when employing staff? Boundless has the expertise to unveil the nuances behind these issues and also offers country specific calculators to help employers run simulations to inform decisions.

Dee Coakley, CEO at Boundless, commented, “Our Decoding Employment Costs in Europe comes at a crucial time as companies across Europe grapple with managing distributed workforces and deciding where and how to employ talent.

“The study shines a light on the complex interplay between employment costs and take-home pay. It’s a starting point for recruiters, CFOs, and other key decision makers looking to develop more informed talent investment strategies on how and where to hire talent across the continent.”

Key highlights

The report uncovers some surprising highs and lows across Europe within its findings.

For employers, the net cost for hiring an employee ranges from €61,074 in Lithuania to €88,618 in Austria. The UK and Ireland placed 7th (UK:€67,099) and 6th (€66,630) respectively.

For employees, the net take-home pay is lowest in Iceland (€30,525) and highest in Bulgaria (€51,289). The authors rightly note cost of living and, more importantly, the quality of life within such countries are additional factors. Employers must remember that salary is not the only aspect of decisions made by employees. One surprising factor highlighted by the study is the disparity across the Nordics. Many view the Nordics as having high tax rates. However, the report notes that Iceland has 49.6% deductions and Norway only 30% and is 22nd on the list. The authors do not think that this is a snapshot of the truth. Though, and it may be further nuanced when considering other costs employees face.

The cost-to-pay ratio

The report then looks at some different dimensions. Of most interest is the amount of money an employer has to pay for each Euro the employee actually keeps. Again, there is a huge disparity; Bulgaria (around 0.8) has the lowest cost and Slovenia the highest (nearly 2.5).

The report also looks at the cost-to-pay ratio for other salary levels. It found that in most countries this increased, yet in Bulgaria, the Czech Republic, Poland, Turkey, Latvia, Spain and Austria it reduced. Though in Germany (increased) and Poland (decreased) there is  little difference in the cost-to-pay ratio. Notably, in France, Slovenia and Finland, the cost to pay ration increases above 3x; in Slovenia it is above 3.5!

Dee Coakley, CEO at Boundless (image credit - LinkedIn/Dee Coakley)
Dee Coakley, CEO at Boundless

Discussing the key findings of the study, Dee Coakley said, ”The report shows the two-English speaking countries make a lot of financial sense for companies building distributed teams in Europe. The lower employment costs free up a lot of room in the budget. Businesses can use those savings strategically – whether it’s attracting talent or investing in growth.

“From an employee perspective, there’s also a financial draw,” Dee continues. “The higher take-home pay compared to other European countries could make a real difference in buying power and lifestyle. Now, it’s true – living expenses are higher in the UK and Ireland than some other parts of Europe. But even when you take that into account, the numbers still show some appealing financial perks for workers as well as businesses when compared to countries such as Portugal, Austria, or France.”

Enterprise Times: What does this mean

Sometimes, you come across a piece of research that is worth business leaders reading. That is especially the case with this research. Which offers insights for international expansion, especially for hiring resources in countries within Europe. Your company may wish to hire talent which is unavailable or seemingly expensive in your own country. When considering international, remote employees where location from a work point of view is not an issue, this research highlights that from an employer point of view, you may exceed your budget.

It also identifies the complexity of employing international staff. As the employer of record, Boundless can help organisations navigate this complexity. As an aside, it is worth noting that they don’t operate in Spain. The complexity of employment laws, especially around compliance, is such that Boundless does not administrate employees there. For many within the UK, Spain is one of the choices for self-delocation. Employers should be wary if employees are asking for that. Legal advice seems a sensible path.

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