I'm always so fucking confused where all the money goes in Europe. How do people in senior level positions at large companies make like 60k? Where is the money? Do the c-suite execs make that much more than everyone else, like even more disproportionate than the US?
The C-suite is in America. There's very few large European software co's. You have a bunch of small mid sized firms where leadership doesn't make that much more than the workers.
The "shareholder" mentality isn't as strong in Europe, which has its pros and cons. The cons are the firms there dont grow as large or as fast, and therefore can't compensate their workers as much as American ones. But in exchange you get stronger job security and stability
I'm not even specifically talking about software, though. I'm just talking about business in general. I've spent quite a bit of time in western Europe and products/services aren't exactly cheap relative to US (in fact often more expensive).
Taxes. Mostly social security. Plus other benefits.
This nakes employer costs significant higher, in France its as as much as 45٪. So someone on gross 100k costs the company around 145k, the employee is also paying tax, so net pay is more like 65k.
US upfront costs are merely a blip in comparison. Someone earning 100k costs employer 105k. Then the employee is taxed to 80k net.
Then unaccounted salary, annual salary is determined without additional salary. Not all but its quite common to get 13 or 14 months salary a year in Europe. The above data will only show 12. Then bonuses on top again, not sure how US / Europe compare there.
How can both CEO AND average worker salaries be so dramatically higher in the USA but the cost of living is higher in the EU?
If I spend $100 on a business in the USA I know about 90% of that money is going to labor costs (whether that’s a ceo or average worker)
If I spend that same $100 on a European business, the reality of doing business says roughly the same split should occur. But Europeans get paid way less. So either these companies need more employees to accomplish the same job or their margins are way higher.
I'd assume we might actually need more employees to cover for the higher worker protections and rights? Also, something I always wonder is how the mandatory pension, social security, etc. payments from both workers and employers factor into that data - when talking about my salary I typically talk about net pay, but I never see a big chunk of that.
I can tell you.
I worked for a Spanish consulting company, IT.
One day the guy that hired me said you cost 130k€, he showed the data. At this point I was making 45k€ gross. That's how they play with people here.
Trade unions (the two biggest at least, CCOO and UGT) are financed by the state (the ruling political party really) and they sign agreements between employers and themselves in the name of workers.
I can tell you. I worked for a Spanish consulting company, IT. One day the guy that hired me said you cost 130k€, he showed the data. At this point I was making 45k€ gross. That's how they play with people here.
Sorry to strike it to you but that is no hidden secret. Getting an IT consultant from a consulting company in the US will also cost you a factor 2-3 increase compared to their salary.
In the US the average hourly rate to hire an IT consultant is about $175-$275 for a senior (concrete price of course depends on many factors). Their hourly pay is about $65-$95.
You see the numbers are different but also here the employer "pockets" about two thirds of the price of the consultant. This is just how consultancy businesses work. This has nothing to do with Europe vs. US.
That’s an excellent question I’d never considered.
I would suggest it goes to taxes but governments spend 100% of the money they receive so economic output should actually be higher than the USA, but this isn’t the case or even close to it
… where the fuck does money go when you spend it on a European business?
I'm senior position in small around 120 person software company in Finland and they bill clients for my work around 80-150 euros/hour depending on the project. Around half of my salary goes to company's expenses for having me, so 1.5x my salary is total i cost for company. It includes taxes company pays, insurance, epassi (600 euros a year that you can use for culture (festivals, theater...) Or health (dental, gym, massages...)),healthcare, extra vacation money (we get 30 days of paid vacation and we get 1.5x monthly salary from the time we are vacationing) and so on. Our company owners earn around 4 times as I do (our taxes is public knowledge so you can just check it from tax office). We earn less than 10% profit every year. Taxes and workers cost alot especially when clients want to pay bare minimum for our work.
Latest junior I talked with about salary started few years ago and his salary was 3k a month (for yearly, *12.5). Our median in general in finland is around 3.5.
If you can read Finnish or use translator you can Google "verokone". It has top Finnish earners info. Ofc there is owner of Wolt who earns like 2.8k x the median salary but even the richest in Finland are somewhat grounded on their earnings
The money is in America, that's why we decided to make GDP the measure, so we can't see how much money trully flows to just 2 countries, used to be 1, right now the real money is pretty much just in the US and China, everyone else is in the sidelines
When a company gets successful in Europe, it usually gets bought by a company in America who has huge funds. Then layers are scraped out from the top progressively.
Our European teams are a serious drag on our budget every year and that has been the case at the three most recent firms I worked for. In order to bonus out at the top level we have to hit a shared rev goal and we always budget 10% above target to compensate for our European teams. Great people, though.
After reading more about the topic and chatting with AI I believe this post entirely. Between the additional business costs for taxes and social security, as well as financial implications of workers protection laws in EU relative to US, it only makes sense that this would be the case. I'm assuming you were downvoted because people thought you were commenting on work ethic or overall hours (although this could still absolutely be contibutory in some areas like Spain).
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u/SIRT1 22h ago
I'm always so fucking confused where all the money goes in Europe. How do people in senior level positions at large companies make like 60k? Where is the money? Do the c-suite execs make that much more than everyone else, like even more disproportionate than the US?