EU riven by big wage disparities

Accommodation services is the lowest-paying sector in the EU. [Shutterstock]

Income inequality is rife within the EU, with average wages in northern member states up to five times higher than those in Southern Europe, according to Eurostat figures published on Monday (12 December).

Eurostat this week published figures on income disparities and wage distribution within the EU. The Structure of Earnings Survey carried out every four years by the EU’s official statistics office, revealed that the gap between high and low earners is smallest in Scandinavia and Belgium and widest in Poland, Romania, and Cyprus, while women and young people are most likely to be low earners.

In a comparison of the gross hourly wages of the top 10% of earners with those of the bottom 10% in each EU member state, Sweden came out on top as the country with the most equal earnings, at a ratio of 2.1 to 1.

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Belgium, Finland, and Denmark came in joint second place, all with a high to low wage ratio of 2.4. Close behind, with a ratio of 2.7, is France.

At the other end of the scale, Poland’s top 10% of earners make 4.7 times more per hour than the country’s bottom 10%. This was closely followed by Romania, with a ratio of 4.6, and Cyprus, with 4.5.

No data was available for Croatia or Greece.

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Big differences in median wages

While the discrepancies in wage equality between EU member states are significant, the differences between median wages are even more striking.

The median gross hourly wage in Denmark is €25.50, compared to just €1.70 in Bulgaria. When corrected to the purchasing power standard (PPS), the average Dane earns €18.50 per hour; more than five times more than the average Bulgarian at €3.60 per hour.

Just above the bottom spot was Romania, where the median gross hourly wage of €2.00 corresponds to €4.00 PPS. Then come Latvia and Lithuania, where the actual median wages of €3.40 and €3.10 translate to €5.00 and €5.10 PPS.

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Back at the top of the scale, Denmark is closely followed by Ireland, with a median hourly wage (PPS) of €18.40, then Belgium (€15.40 PPS), Germany and Luxembourg (both at €15.00 PPS).

Finance sector out on top

Financial and insurance activities are the highest paid across the EU, appearing in the top three sectors in every member state except Ireland. Information and communication also appear in the top three highest-paid sectors in the majority of EU countries.

Mining and quarrying tend to be a high-earning sector too, topping the list for the UK, the Netherlands, and Denmark.

However, accommodation and food services workers earn consistently low wages across the EU, coming bottom of the list in every member state with the exception of Spain and Slovenia, where they come second from bottom.

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The newly agreed minimum wage in Germany may not be implemented before 2017. Yet it is crucial for limiting social dumping, according to the French government, which announced a new offensive against low-cost workers ahead of next year's European Parliament elections.

Women and young people earn less

When it comes to the proportion of low-wage earners, Belgium, and the Scandinavian countries again leave their EU partners behind.

Just 2.6% of Swedish workers earn less than the country’s low-wage threshold of €12.30 per hour. The numbers of low-paid Belgian (3.8%), Finnish (5.3%) and Danish (8.6%) workers are also far below the EU average of 17.2%.

More than one in four Latvian workers (25.5%) earns less than the low-wage threshold of €2.20 per hour. This is closely followed by Romania (24.4%), Lithuania (24%) and Poland (23.6%).

And perhaps more surprisingly, 22.5% of German and 21.3% of UK workers earn less than their respective countries’ low wage thresholds of €10.50 and €9.90 per hour.

Across all EU member states, women (21.1%) and young people under 30 years old (30.1%) are most likely to be low earners.

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