UK employment is cheapest in Western Europe…

It remains cheaper to employ people in the UK than in any other Western European country, according to the 2007 Trends in Human Capital report by Saratoga, a division of Pricewaterhouse-
Coopers (PwC).

Data collected from 66,000 commercial organisations throughout Europe reveals that company costs per full-time employee in the UK now stand at £97,122 at the median (the mid-point in the range of figures).

Such costs typically include pay and bonuses, employers’ national insurance payments and pension contributions, office accommodation costs, and central costs, which incorporate elements such as HR and finance departments.

Data collected by PwC shows that employee costs in the UK span a greater range than those in many other European countries.

The bottom one-tenth (the lowest decile) of companies report employment costs of less than £37,428 for each full-time equivalent employee. The top one-tenth (the highest decile) of companies have costs of more than £306,629.

The middle half of all companies (the inter-quartile range) report costs for each full-time equivalent employee of between £61,653 (lower quartile) and £168,967 (upper quartile).

Typically, the firms with the highest employment costs are in industries with the highest salaries and where the government-funded social infrastructure is highly developed.

… and old Eastern Bloc states are catching up

The report reveals that it typically costs companies twice as much to employ a full-time worker in Western Europe as it does in Central and Eastern Europe.

At the median, the cost per full-time equivalent employee stands at £114,013 in the West, compared with just £52,221 in former Eastern Bloc countries, most of which are now EU members. The median for Europe as a whole is £113,315.

The most expensive countries in which to employ people are Ireland, with a median cost of £171,188, and Norway, with a median cost of £143,302.

The cheapest countries are Croatia (£45,768) and Slovakia (40,563).

At a median of £63,943, it costs two-thirds as much to employ a worker in Poland as in the UK.

According to PwC, costs per full-time employee rose by 10.2% across Europe last year – a significantly higher rate than the 7.6% average of recent years.

The rise has been particularly steep in Eastern Europe, and PwC expects this trend to continue.

Overall, it says, companies operating in Western Europe appear to be controlling costs more effectively than in previous expansionary periods – but it remains unclear whether this will be sufficient to help them beat off low-cost global competitors.

… as pay levels converge

Pay and benefits for workers in the UK fall short of the European average, and continue to lag far behind those of employees in countries such as Germany and Norway, according to the study.

At the median, UK employees earned £24,532 in salaries, variable pay and other benefits last year, while the figure for Europe as a whole stood at £26,460. The best-paid workers were those in Norway, with a median level of £45,692.

But, according to PwC, UK workers saw their remuneration rise by 4.1% last year, compared with an average 1.7% across Western Europe.

While the figure for Europe as a whole was 8.6%, this was largely accounted for by a massive 53% average increase in remuneration for employees in Central and Eastern Europe, where employers are struggling to retain key talent and skills.

By Mark Crail

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