Der Standard – 23.11.2021
What does a good salary really mean?
There can be no unequivocal answer to this question, because ‘good’, like ‘fair’, are concepts which correspond to a subjective perception. And yet politics and companies should devote themselves to this question and try to shed light on it from as many aspects as possible. It immediately makes sense why companies must address this question, after all, they want to find and keep the best suited employees. But why politics? It is about the right political framework, so that on the one hand the economy can get the right key workers from abroad, and on the other hand the people in this country can afford enough with their hard-earned money.
Politics and business, both must give an attractive answer to the question of what a good salary means.
Let’s state the obvious:
Salary serves as material security
And so, it guarantees one of the basic human needs according to Maslow’s pyramid of needs: security.
Only when people feel that their salary ensures a reasonably carefree life – pay rent, enable children to study, save money for emergencies, save for their own apartment, be financially secure in the event of illness and be able to afford leisure activities such as vacations every now and then, only then you will at least perceive the salary as ‘ok’ – we are still far from ‘good’.
How well protected are Austrians by their wages and salaries?
According to Statistics Austria the mean net annual income in 2019 was 22,104 euros (women: 18,233 euros, men: 25,938 euros) and has increased by 37% compared to 2004.
According to the Austrian Chamber of Commerce, the consumer price index rose from 115.9 to 153.5, i.e., also by 37.6%. – in the same period from 2004 to 2019
https://wko.at/statistik/prognose/inflation.pdf
Excluding part-time and non-year-round employees as well as apprentices, according to the statistics authority the mean net annual income was a total of 30,766 euros (women 27,995 euros, while men earned an average of 32,126 euros), which is an increase of 45.5% compared to 2004. Interestingly, over the same period the mean net salaries of full-time women increased by 53% and that of men by 41.8%.
Conclusion: At first glance, our purchasing power has remained stable, and Mr. and Mrs. Austrian have been able to afford more or less the same things for their salaries over the last 15 years (2004-2019).
BUT: according to WIFO, in the twelve years from 2000 to 2012 rental expenses rose much faster than the consumer price index, namely by 44.6%. And this dynamic has continued from 2013 to 2017, when rents have increased by 15%, but average salaries only by 9.2% !!
Now theoretically all federal states except Vienna could breathe a sigh of relief, as the proportion of apartment owners predominates: 51% -72% of all households are property owners (except for Vienna), but the Austrian National Bank published the residential property index on October 18, 2021, which illustrates how the costs for home ownership have exploded during recent years and are in no relation anymore to the development of wages and salaries for the same period. Property prices rose by 7% in 2020 alone, and the increase will be even steeper in 2021.
Österreich Wien Österreich ohne Wien Gesamt1 Gesamt Einfamilien- häuser
Eigentumswohnungen Gesamt Einfamilien-
häuserEigentumswohnungen Gesamt Neue Gebrauchte Gesamt Neue Gebrauchte Veränderung zum Vorjahr in % 2018 6,9 5,2 0,9 5,5 5,3 6,4 8,5 8,6 8,5 8,1 9,7 2019 3,9 4,9 3,0 4,9 5,9 3,8 2,6 2,0 2,9 2,3 3,4 2020 7,0 6,7 13,3 6,3 6,8 5,9 7,5 9,4 6,4 8,3 4,9 Q2 20 5,2 4,1 11,7 3,6 5,4 2,3 6,8 10,6 4,6 7,2 2,6 Q3 20 9,5 9,4 13,8 9,1 8,3 9,8 9,7 12,1 8,3 9,4 7,2 Q4 20 10,0 9,4 17,2 8,9 8,3 9,5 10,7 11,4 10,2 13,0 7,8 Q1 21 12,3 10,9 10,0 11,0 10,4 11,4 14,0 12,9 14,7 16,7 12,9 Q2 21 11,7 10,7 9,3 10,9 10,1 11,3 12,8 11,3 13,7 12,9 14,3 Q3 21 10,4 10,2 5,0 10,7 9,9 11,3 10,6 10,4 10,8 9,5 11,8 Quelle: OeNB, DataScience Service GmbH (DSS), TU Wien, Prof. Feilmayr.. Lots of statistics, but what does it all mean in concrete terms:
Let’s assume a 28-year-old full-time worker who has already been working as a mechanic for the last 10 years. She will earn at least EUR 2,850 gross per month or EUR 28,000 net per year.
A university graduate from WU who starts in controlling can expect a monthly gross amount of EUR 2,600 in the first year and thus receives EUR 26,000 net annually. Both are not far from the Austrian median net income for full-time employees of EUR 30,766.
If you think long-term and want to buy a 100 square meter apartment in the country or a 75 square meter apartment in Vienna instead of renting – these are the average apartment sizes in Austria or in Vienna per household, according to Statistics Austria
then they must reckon with a minimum purchase price of EUR 300,000 and currently repay annual loan installments of around EUR 15,000. All just exemplary – but it shows how tight it turns out, although our two examples clearly belong to the higher earners.
In 2019, the percentage of low wage earners, who receive less than 2/3 of the average gross hourly wage, was 13.4% of all employees. According to Statistics Austria, the proportion of people at risk of poverty has increased
by 16.7% from 1,047 million people to 1,222 million people between 2004 and 2020!
Conclusion: If living is one of our basic needs, then we must seriously worry about the current development.
How good is our salary compared to other countries?
According to Statista.com, Austria was the 10th richest country in Europe in terms of gross domestic product in 2020 – and thus claims a place ahead of Germany (11th) and Belgium (12th) – and the 14th richest country worldwide. According to Salary.de, the German median salary is EUR 43,200 gross in 2021, and just under EUR 28,000 net – well below the Austrian median wage level for full-time employees of EUR 30,766 in 2019, and for years, it was the other way around. However, the cost of living in Austria is around 6.4% higher than in Germany (2020) – despite this, our wage level currently enables higher purchasing power.
In this context, it’s interesting to consider a report from 2020 provided by länderdaten.info, which calculates the cost of living and purchasing power in relation to income and uses data from the OECD, the World Bank, Eurostat, and the IMF. Please note, this document doesn’t consider the median salary, but the gross national income per inhabitant, and Germany was used as point of reference for the comparison with a value of 100 for its cost index and purchasing power. According to this source, Norway, Luxembourg, Iceland, and Switzerland are at the top, followed by Austria and Denmark, just ahead of Germany.
https://www.laenderdaten.info/lebenshaltungskosten.php
Our good salary level is particularly evident in a study shown by OECD where Austria assumes the 10th place out of 35 countries. The report considered the average annual wages for full-time and year-round employees and showed the real wage development since 1990 in US dollars, adjusted by the purchasing power of 2019.
Despite our top position, the salary in Iceland has increased by a remarkable 76% (adjusted value) over the last 30 years and Norway’s wages have increased by 74% since 1990 – Austria – with only 25.5% wage increase -should learn from these countries.
Land 1990 1995 2000 2005 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Luxemburg 49.163 53.716 58.863 61.382 65.956 64.984 64.452 65.079 67.518 68.382 68.504 69.541 69.556 68.681 Island 38.571 39.839 51.029 58.525 48.372 50.704 50.565 51.276 52.035 56.081 61.207 67.710 70.003 68.006 Schweiz 52.519 55.323 57.850 61.175 64.219 64.327 65.465 66.477 66.583 66.517 66.350 66.132 66.121 66.567 Vereinigte Staaten 46.362 47.577 54.642 57.331 60.248 60.330 60.826 60.542 61.447 62.982 63.079 63.734 64.397 65.836 Dänemark 41.367 42.781 45.532 49.975 53.947 53.668 53.593 53.949 54.978 55.943 56.883 56.277 56.828 57.150 Niederlande 50.053 50.909 51.451 53.607 56.940 56.588 56.820 57.020 56.712 57.378 57.573 57.138 56.709 56.552 Belgien 42.574 47.584 51.083 52.365 53.341 53.886 54.295 54.845 55.117 54.737 54.884 54.626 55.066 55.590 Norwegen 31.089 33.100 37.616 43.263 49.248 50.962 52.365 53.396 53.663 53.944 52.943 53.034 53.485 54.027 Australien 40.717 41.839 46.156 49.641 53.055 54.733 55.058 54.806 55.226 54.774 54.800 54.327 54.147 54.401 Österreich 42.962 46.395 48.302 50.217 52.719 52.179 52.446 52.510 52.711 53.052 53.589 53.437 53.561 53.903 Deutschland … 43.590 45.310 46.275 46.772 47.739 48.392 48.862 49.700 50.878 51.623 52.181 52.930 53.638 Kanada 40.133 40.231 44.178 45.888 49.996 50.530 51.189 51.717 52.325 52.694 51.563 52.219 52.831 53.198 Irland 25.028 31.753 37.538 42.760 49.758 49.746 49.194 47.972 47.597 48.408 49.030 49.585 49.695 50.490 Vereinigtes Königreich 31.859 33.631 39.233 44.297 45.790 45.045 44.428 44.998 45.146 45.532 46.088 46.493 46.656 47.226 Schweden 28.916 28.780 34.486 37.733 41.550 42.180 43.133 43.647 44.240 44.849 45.552 45.818 46.062 46.695 Frankreich 34.329 36.200 38.278 41.024 43.749 43.682 43.975 44.345 44.651 45.088 45.610 46.163 46.256 46.481 Finnland 34.539 35.057 38.361 41.697 44.507 44.528 44.574 44.138 44.138 44.616 44.976 44.864 45.023 45.698 Neuseeland 30.948 32.249 32.873 37.231 40.105 40.106 40.951 40.495 40.808 41.673 43.183 43.399 43.770 44.031 Südkorea 22.335 28.481 29.335 34.083 35.543 36.012 35.486 36.395 36.492 37.513 38.617 39.552 40.820 42.285 Slowenien … 24.305 28.429 32.992 36.712 36.589 35.465 34.933 35.616 36.372 37.871 38.503 39.078 40.220 Israel … 29.160 35.747 33.285 32.977 33.272 33.812 34.411 34.487 35.439 36.729 37.745 38.603 39.403 Italien 37.733 36.134 38.009 39.149 39.967 39.328 38.086 38.205 38.354 38.691 38.982 38.707 38.853 39.189 Spanien 35.883 38.039 37.933 37.415 41.036 40.302 39.176 39.178 39.056 39.638 39.413 38.898 38.554 38.758 Japan 36.412 37.470 38.050 37.773 37.775 38.627 37.968 37.942 37.265 37.226 37.896 38.085 38.193 38.617 Polen … 16.490 20.903 21.848 24.534 24.536 24.320 24.597 25.098 25.648 26.934 28.071 30.091 31.970 Estland … 9.104 12.735 17.656 21.971 21.479 21.798 22.333 23.548 24.629 25.841 26.555 28.499 30.297 Tschechien … 14.118 16.836 21.801 23.909 24.072 24.060 23.806 24.304 24.970 25.819 26.889 28.360 29.281 Litauen … 8.443 11.867 18.124 19.694 20.106 20.412 21.226 22.180 23.593 24.854 26.258 27.368 28.914 Lettland … … 11 477 15.551 18.982 18.316 19.067 20.005 21.307 23.258 24.663 25.620 26.765 28.454 Griechenland … 23.906 28.158 33.385 32.582 30.398 28.972 27.100 27.574 27.449 27.395 27.322 27.480 27.459 Chile … … 17.945 18.279 24.237 24.369 25.153 25.803 26.017 26.001 27.044 26.313 26.369 26.916 Portugal … 24.360 27.515 27.436 28.064 27.385 26.209 26.712 26.253 26.176 26.024 26.141 26.413 26.634 Ungarn … 15.266 16.817 22.921 22.367 22.543 21.664 21.414 21.148 21.450 21.810 23.527 24.703 26.223 Slowakei … 11.850 15.378 17.754 21.256 21.071 20.813 20.966 21.377 22.230 22.947 23.610 24.254 25.452 Mexiko 15.021 14.653 16.742 18.169 17.050 17.203 16.895 16.909 16.888 17.102 16.981 16.984 17.181 17.594 ↑ OECD: Average annual wages.
Within Austria, how good are the average salaries by industry and region?
StepStone released its latest salary report in June 2021. Attention: Median salaries (i.e., the central value, which is exactly in the middle of all salaries analyzed) are not used here, but average salaries, which of course must always be viewed critically:
- 52,000 euros gross per year – this is currently the average annual salary of employees in Austria.
- When comparing cities, the picture is surprising: Linz and Bregenz (55.600 euros) lead the top salaries – even before Vienna (54.931 euros), followed by Innsbruck (51.700 euros), Graz (51.000 euros) and St. Pölten (50.250 euros).
- Top is the banking world with an average of EUR 64,250, followed by consumer goods, chemicals, pharmaceuticals, and medical technology – all of which still have an average annual salary of over 60,000
- Executives in top management earn more than twice as much as employees without personnel responsibility. While executives with up to four subordinates earn an average of 53,300 euros, executives with at least 100 subordinate employees already earn a salary of 96,600 euros.
- Education: Those who study earn an average of 34 percent more
- It plays an important role in which company you are employed. In general, the following rule of thumb applies: the larger the company, the higher the salaries.
Can salaries be so good that they make you happy?
This question inevitably leads to Nobel laureate in economics, Daniel Kahneman and his co-author Angus Deaton. in 2008/2009 they asked 450,000 Americans how much they earned and how they had felt the day before. Their conclusion: those who earn more are usually happier, but only up to a certain point. Beyond the threshold of a gross household income of $ 75,000 (the equivalent of 60,000 euros), the assessment of personal happiness remains the same with every additional dollar earned.
But be careful, this survey was conducted over 10 years ago, EUR 60.000 are not worth as much today as they were back then, as prices in Austria alone rose by over 30% over this same period.
And the salary level in the USA is not comparable to the Austrian one, the gross median salary in 2020 was 67,521 USD, while the Austrian gross median salary for full-time employees was 43,719 in 2019.
Conclusion: the law of diminishing marginal returns may apply to salary increases, but the amount at which this effect starts should be re-determined.
In a new study, the psychologist Matthew Killingsworth of the University of Pennsylvania showed that the daily emotional well-being increases with a household income increasing well beyond the amount of 80,000 US dollars – with no upper limit: rich people feel like they are more in control of their lives.
How good is my salary?
Wie gut ist mein Gehalt?
Even if we live in a rich country with fairly high salaries, only the subjective response of each individual counts as to how good their own salary is perceived.
In June 2020, Randstad US clustered its study by age group and found out how regular salary increases are important drivers for each age group to want to stay with the company.
2018 2019 2020 All employees 82% 66% 62% Gen Z (18-24) 82% 73% 65% Millennials (25-34) 91% 74% 78% Gen X (35-49) 80% 71% 72% Baby Boomers (50- 64) 76% 62% 57% Traditionalists (65+) 63% 43% 40%
Salary increases are particularly important to millennials – and yet in this survey 64% say that they would rather take a position where they would be positively challenged and where they could develop professionally than a job with a higher salary but without personal growth opportunities.
Salary is important – but not only, this result is confirmed by a survey from ZenJob in 2021: Gen Z rank honesty and open communication in the corporate culture first and good salaries.
Career and salary alone are no longer the only needs to be satisfied – in the Gen Z hierarchy of needs, work-life balance (69%) comes first, then flexibility (54.8%), personal identification with the company (54.7%), diverse tasks (52.5%), job security (45.4%) and the wish for a company to be particularly digital and progressive (23.6%).
What do all these findings mean for politics and companies:
- offer affordable housing, so that work pays off
- Paying good salaries – this is just the tip of the iceberg; or it ensures the ‘hygiene factors’, according to Frederick Herzberg’s empirical study of 1959! about job satisfaction: money and status are not suitable for long-term motivation, but rather…
- …real incentives arise when individuals get professional growth opportunities and work in…
- …a culture of fairness and inclusion, where each one can develop one’s strengths regardless of age, special needs, gender, nationality, status
