this post was submitted on 06 Jul 2023
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I couldn't tell you why individual American companies in Europe pay more, but I'm guessing a big part of it is the difference in tax burden for companies based in Europe vs America. American companies have the majority of their employees in the US, and for these employees they pay much less into the system than Europe based countries so are able to pay more for a few European employees.
For example, payroll taxes/social fees (the fees and taxes your employer pays on your behalf) and corporate taxes are much higher in North Europe than in the US. Sales tax/VAT is higher in Europe and, while it's technically paid by customers, companies have to take the sales tax surcharge into account when setting the prices for their goods and services to be competitive on a global market. That means they can't afford astronomical salaries.
But they pay 30-80% than non americsn companies where I work. Same country same laws same taxes. They still pay way more.
Yes, and I answered that I think there are more factors, but that tax burden is a big reason?
An American company which has 100 employees located in America and 2 employees located in Europe will have a smaller total tax burden as a company, than a European company with 102 employees located in Europe. Same number of employees, very different bottom line tax burden. The American-based company can thus afford to pay their few European employees more, to outcompete European companies on salary on the labor market.
I see your point better now - thanks for claryfing. Still shouldnt european companies that have massive profits choose to pay also way more? I cant see much difference between salaries in local companies (even with big well profitable ones). I would expect some to pay 2x for example then if they can afford it (they can in some cases I know).
But from what you suggest it may be possinle for some american companies in europe to benefit from some taxation stuff and by doing so they can pay more. What I hear is they can pay more and choose to do so to get talent in contrast with local companies that could do the same bur rather keep it to them instead. So again without trying to sound arrogant I think US rewards talent and europe mediocrity.
No problem. My impression (based on an extremely small sample size though) is that there are some trade-offs to working for American companies in Europe, like your American managers not understanding that there are strong labor laws here giving you the right to take cohesive vacation, sick leave and parental leave. Work hours (meetings booked in the late PM for us) and 24/7 availability expected and degraded work-life balance. Essentially that some of the American work culture bleeds over across the pond.
That probably varies a lot from company to company, manager to manager and job description as well though.
The US companies do seem reward talent and performance (or the appearance of talent and performance) with great pay. On the flip side they will also drop you in the blink of an eye of you have a period with mental or physical health problems, or aren't getting good KPI metrics for a while due to circumstances outside of your control (poor management, bad KPIs, being inbetween projects etc).
I guess what I'm getting at is that American jobs are more "big risk, big reward" (but they will discard you the moment you aren't as useful) and European companies don't really work like that.
But I do personally agree with you in general, that European companies both can afford and morally should pay better. However, I feel that that conversation is a different one than the European-American work culture and pay divide.
I think sometimes its also the ilusion of safety. An european company can fire you basically at will in Denmark - its just not often people get fired unless the company is struggling a lot. But it can happen. I saw the case personally with someone getting fired because the manager didnt like him even though he worked well in a local company and no one beats and eye.
The american companies here still have at least some local managers. So perhaps theres some meetings a bit late sometimes but other than that its the same as a local company. Except you get paid way more for the same job.
And since they follow the same laws and regulations as any orher local company I think its better off to work for these. In the event you get fired you got some extra money by working in one and can get another job in another one after.