For the young and hungry, Europe is fast losing its allure as a prestigious job market
- Europe’s gentle decline is becoming more marked after a decade of crises and its economy – with low pay, high taxes and a high cost of living – shows little sign of improving
- Beyond banking and other traditional industries, Europe is conspicuous in its absence
Europe offers low pay, high taxes and a high cost of living, with no sign of improvement after a string of crises over the past decade. For many industries, one can make a strong case for picking China instead; Europe’s visible stagnation should deter the tech-savvy and innovation-minded.
To start with, the pay can be dismal. In a recent survey, relatively fresh Oxford graduates working in the United Kingdom earned an annual median salary of £35,700, taking home £28,300 (US$35,210) after tax.
Their counterparts from the National University of Singapore do slightly better: they earned an annual median of at least S$51,600 last year, or S$50,238 (US$37,590) after tax. But their Ivy League peers can expect US$86,025 three years after graduation.
The gap is even more striking in some professions. For example, a software engineer with less than a year of experience can, according to Glassdoor, make more than US$100,000 in the US, but less than £46,000 (US$57,300) in the UK and €55,500 (US$60,700) in Germany.
Even in corporate services, supposedly Europe’s strong suit, the picture is no less unflattering. McKinsey & Company pays its entry-level business analysts in Europe about half as much as their American peers – £50,985 in the UK and €58,157 in France, compared with US$118,884 in the US, CA$110,368 (US$81,200) in Canada, AED252,000 (US$68,600) in the United Arab Emirates and S$79,500 in Singapore (bearing in mind the latter two’s tax advantages).
Tellingly, McKinsey’s European salaries are only 15 per cent higher than the 380,000 yuan (US$54,900) in China, hardly a reflection of local price differences. A bit more fiddling on the internet and some nosy phone calls to friends reveal that McKinsey’s pay scale is the norm among multinationals.
The pay differences are partly a reflection of economic performance. On the eve of the 2008 global financial crisis, the per capita gross domestic product of major European economies was neck and neck with the US, at around US$45,000, according to the World Bank. By 2021, GDP per capita in the US had reached US$70,000 but not yet recovered in Britain and France, though Germany managed to raise its per capita GDP to US$51,000.
Germany again makes Europe’s strongest case; its country average is only around half of America’s. But at close to US$1,000 per month, even Germany’s rent is higher than in many Chinese cities.
Price indices provide a more holistic picture. In 2019, the price level of household consumption in Britain was almost identical to the US level in 2017, while that in France and Germany was around 90 per cent of the US benchmark. By comparison, the UAE, Singapore, Hong Kong and mainland China were all at or below 80 per cent.
Product quality is hard to account for. Yet Europe is hardly at an advantage. In China, the quality of goods and services is comparable, and with a vastly greater variety.
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But beyond the traditional industries, Europe is conspicuous in its absence. None of the top 10 tech companies by market capitalisation is European. Only Dutch chip maker ASML and German corporate service provider SAP make it into the top 20. Neither are household names.
Europe’s largest consumer-facing tech company, Spotify, is worth just US$26 billion, barely 1 per cent of the valuation of Apple, America’s largest. The carmaking industry, a pride of the continent, paints a vivid picture of corporate Europe in 2023 – ageing oligopolies seemingly bewildered by new technologies.
Personal circumstances matter. Many from the Arab world have family ties in France, as do Turks in Germany and South Asians in Britain. Yet Europe is no safe haven from populism and international politics.
In 2021, political machinations led France to drastically cut visa issuances to Morocco, Algeria and Tunisia. Speaking as a Chinese, the case for Europe has been greatly weakened by the social stigmatisation of China and, to an extent, ethnic Chinese in the past few years.
The implications of Europe’s dramatic decline in job market competitiveness goes beyond talent retention. Indeed, talent might not come Europe’s way in the first place. Local job prospects are an important factor in students’ choice of universities.
Europe still has much prestige attached to it but increasingly, it will lose out on the world’s best and brightest. Whether this will accelerate Europe’s march to irrelevance is to be seen.
Deng Jing-Yuan is a consultant at the World Bank’s Office of the Chief Economist for the Middle East and North Africa
