Why are wages in Germany so low compared to other developed countries?

Updated on : December 3, 2021 by Corey Davis



Why are wages in Germany so low compared to other developed countries?

Germany is not the first destination for expats landing here. These first places are usually reserved for:

  1. USA
  2. United Kingdom
  3. Canada
  4. Australia
  5. Middle East (tax-free income)

And there is a good reason for it.

All of the above destinations have a long history of hiring professionals from other countries. It is common to see cultural and ethnic diversity in all of the counties mentioned.

All of them offer benefits such as:

  • Global opportunities
  • Higher wages and
  • Easier cultural and linguistic integration (relative to Germany).

On the contrary, in 2014, while working at the Berlin Mitte (heart of Berlin), I could spend a week or

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Germany is not the first destination for expats landing here. These first places are usually reserved for:

  1. USA
  2. United Kingdom
  3. Canada
  4. Australia
  5. Middle East (tax-free income)

And there is a good reason for it.

All of the above destinations have a long history of hiring professionals from other countries. It is common to see cultural and ethnic diversity in all of the counties mentioned.

All of them offer benefits such as:

  • Global opportunities
  • Higher wages and
  • Easier cultural and linguistic integration (relative to Germany).

On the contrary, in 2014, while working in the Berlin Mitte (heart of Berlin), I was able to go a week or even more, without seeing another Indian. The day I saw someone on the road or during lunchtime, it was a special day!

Things have changed a bit from then until now. There is much more diversity entering Germany.

Although, very slow !!

Traditionally, Germany never had to depend on the international workforce to build its economy. The only other significant group, after the Germans, is the Turk. And it's easy to see the distinction. Having been here for so long, integration has been a challenge.

Germany is not culturally diverse and therefore did not need to adapt to global standards. They pride themselves on their culture and language, which was fine until about 2010.

Since then, the speed of global changes and new economies has left Germany in trouble. The German economy is highly dependent on the manufacturing and automobile industries. While there will always be a need for their products, the weights have changed. Internet companies rule the world and drive the economy. The auto industry is undergoing a painful transition to electric vehicles, forced by Tesla and other similar players (mainly from China).

Germany has lagged behind in this race and now they are trying to catch up. The sad part is that there is still no sense of urgency.

  • That is why they still want to hire the "best professionals" for German salaries.
  • If this professional receives an offer between € 75,000 and € 80,000 in Germany, the Germans will think that they did a good job.
  • What they forget is that this professional can obtain an offer of more than € 100,000 from other countries (without the need to learn the language and culture)

In this scenario, will you choose Germany?

What makes it worse is that, while companies talk about diversity, almost all lack diversity at their decision-making levels.

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If you want to talk about something about your career, connect with me at ——> LinkedIn

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It is cultural.
Germans have this "job for life" expectation, after WWII the now retired generation expects their children (and so on) to join a company and stay there.
Workers' unions / councils guarantee protection and in general layoffs are based on loyalty (first in, last out or last in, first out), so it is safer to stay with your employer.
Potential new employers are often very reluctant to hire people who have not worked for companies for years, as the job change is viewed as negative for some reason. Why wouldn't a company want fresh new ideas from someone who has seen it done elsewhere?

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It is cultural.
Germans have this "job for life" expectation, after WWII the now retired generation expects their children (and so on) to join a company and stay there.
Workers' unions / councils guarantee protection and in general layoffs are based on loyalty (first in, last out or last in, first out), so it is safer to stay with your employer.
Potential new employers are often very reluctant to hire people who have not worked for companies for years, as the job change is viewed as negative for some reason. Why wouldn't a company want fresh new ideas from someone who has seen better how it's done elsewhere? Oh yes, Germans ...
Also, there is a lack of internationalism compared to some countries, I know staff in high-level positions who could double or triple their salaries (and given the taxes triple or quadruple they take home) if they were willing to leave Germany.

Furthermore, the environment has a role to play. Often you are also tied to a house / apartment for years, the rent (the norm) is long-term, contracts bind you (and rates stay fixed) for years, and the idea is that you stay. So moving for work or moving to a better position in another area is more difficult than in other countries. Compare the average rental period in other countries.

All this causes a lack of mobility of the German workforce. Which gives power to German employers and not to employees. This equates to lower wages. However, on the positive side, the prices are cheap in stores.

It's quite simple: in the 80s wages in Germany were high compared to other countries. When unemployment rose in this decade and in the 90s, managers blackmailed the entire population in every political speech in the media. They said that German wages are too high and that industry and employment will leave Germany. They planned to build factories in other countries with lower wages. Even the German trade unions and the Social Democratic Party helped managers create an eleventh commandment: You will not ask for more money (or you will be unemployed!) More than 2 decades

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It's quite simple: in the 80s wages in Germany were high compared to other countries. When unemployment rose in this decade and in the 90s, managers blackmailed the entire population in every political speech in the media. They said that German wages are too high and that industry and employment will leave Germany. They planned to build factories in other countries with lower wages. Even the German trade unions and the Social Democratic Party helped managers create an eleventh commandment: You will not ask for more money (or you will be unemployed!) For more than two decades, most people believed that there was no alternative to low wages to to struggle. unemployment. Most of the time we ALL believed, that this is the form of economy in all developed countries. And now little by little we begin to wake up and realize, that the history of expensive work in Germany is already a fairy tale for many years. And now we are the "Billiglohnland" (country of low wages), we were afraid in the 90s and other states criticize the amount of our exports and the lack of imports. Now we work for less money than others and that is why our products are cheap…. and we cannot afford the products of other countries, because we simply do not have the money for it. Funny, huh? I wonder, if Mr. Trump knows about these facts, when he demands more imports to Germany ... Ok, I don't wonder, I KNOW, that he doesn't LOL Now we work for less money than others and that's why our products are cheap ... . and we cannot afford the products from other countries, because we just don't have the money for it. Funny, huh? I wonder, if Mr. Trump knows about these facts, when he demands more imports to Germany ... Ok, I don't wonder, I KNOW, that he doesn't LOL Now we work for less money than others and that's why our products are cheap ... . and we cannot afford the products of other countries, because we simply do not have the money for it. Funny, huh? I wonder, if Mr. Trump knows about these facts, when he demands more imports to Germany ... Ok, I don't wonder, I KNOW, that he doesn't LOL and we cannot afford the products of other countries, because we simply do not have the money for it. Funny, huh? I wonder, if Mr. Trump knows about these facts, when he demands more imports to Germany ... Ok, I don't wonder, I KNOW, that he doesn't LOL and we cannot afford the products of other countries, because we simply do not have the money for it. Funny, huh? I wonder, if Mr. Trump knows about these facts, when he demands more imports to Germany ... Ok, I don't wonder, I KNOW, that he doesn't LOL

Because a salary in Germany comprises more comprehensive health insurance and social security benefits than in most other countries in the world, half of which is paid by the employer, so the real cost of hiring someone is roughly one 25% higher than your salary.
In addition, sick leave is paid in full for very long periods of time, and a large part is paid by the employer, people are entitled to up to 14 months of parental leave per child and the employer is obliged to allow them to return to their previous job. . later, and similar rules apply for employees caring for elderly relatives, etc.

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Because a salary in Germany comprises more comprehensive health insurance and social security benefits than in most other countries in the world, half of which is paid by the employer, so the real cost of hiring someone is roughly one 25% higher than your salary.
In addition, sick leave is paid in full for very long periods of time, and a large part is paid by the employer, people are entitled to up to 14 months of parental leave per child and the employer is obliged to allow them to return to their previous job. . Subsequently, similar rules apply for employees caring for elderly family members, etc., so there is a considerable additional cost / contingency that you need to consider as an employer.

On top of that, Germany is a relatively high tax country - people get free higher education, fairly high subsidies for families, etc., but it is paid for with taxes that increase disproportionately with more income, and many of those nice benefits have a limit. in (or even excluded beyond) a certain income.
Therefore, particularly for upper-middle-class jobs, a raise in pay is often not very attractive and they prefer to opt for other benefits instead, such as a paid MBA, a company car, free childcare from the company, etc.

Having grown up in the US and living in Germany (DE) for 4 years, and after reading the other answers, I offer my own: I would say that DE is more developed. I base my answer on the factors used by the UN development program. So let's review a bunch of factors that could be applied to measuring development:

1. Employment: Both countries are for the most part at full employment. Jobs can be acquired faster in the US, but you have far superior protections in Germany. If I become unemployed in DE and cannot find a job with my qualifications, I can go to trade school

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Having grown up in the US and living in Germany (DE) for 4 years, and after reading the other answers, I offer my own: I would say that DE is more developed. I base my answer on the factors used by the UN development program. So let's review a bunch of factors that could be applied to measuring development:

1. Employment: Both countries are for the most part at full employment. Jobs can be acquired faster in the US, but you have far superior protections in Germany. If I become unemployed in DE and cannot find a job with my qualifications, I can go to a trade school or university to learn a new skill, paid for by the government. I think DE wins here.

2. Poverty: poverty levels are similar. Unofficial rates for the US are around 14%, and DE reports around 16%. (I didn't research the definitions to see how similar they are) However, I think the results are different for the very poor. I have seen VERY FEW homeless people in DE. There are thousands who live on the streets of many cities like Seattle, SF, Denver, etc. I think you can live with some dignity being poor in DE. If you are a black teenager living in poverty, you have a 60% chance of ending up in jail. Advantage (slight): DE

3. Health Care: All DE residents must have health insurance. Hundreds of thousands of Americans go bankrupt each year (passing the costs on to everyone else) due to medical bills. The level of care is very similar. Out-of-pocket expenses in Germany are minimal. The level of obesity and infant mortality is much higher in the US Big advantage: DE

4. Education: all public higher education in Germany (trade, college, university) is almost free. Much stronger support for public preschools in DE (not good enough TBH though). Advantage: DE

5. Social cohesion: Germans have a very high social cohesion. Adolescents still embrace their regional traditions today. A cornerstone of adult life in DE is joining one or more clubs, where you can play soccer, play music, drink beer, watch birds, or whatever. You don't feel the class divide in DE as in the US In general, people do not look down on other people from the lower social classes in Germany, as they do in the US Advantage: DE

6. Safety and Security: I still haven't seen a place I wouldn't walk alone at night in DE. The United States leads the industrialized countries in murder rate and incarceration rate. I also have great job security. Advantage: DE

7. Good governance: DE has around 7 main political parties. I don't agree with all of them, but most of them try to improve the lives of their followers. The United States government has become corrupt and ineffective. DE has a balanced budget, while the US is spending a couple trillion dollars on debt every year. Advantage: DE

8. Freedom: America offers some freedoms that we don't have here, like stockpiling weapons, the ability to launch a 'sieg heil' in public, or sell swastika flags. You may find it interesting that the DE press is considered more free. I'll only attribute this to the US, but I don't want any freedom here at DE.

9. Environment and Conservation: Cities in DE don't expand as often. For the most part, it cannot be built outside of a town or village boundary line, so there is not much expansion or fracturing of forests in DE. DE produces more energy than the entire country needs on sunny days thanks to solar energy. DE has the highest recycling rate. The United States has fracking and is now the number one producer of oil and gas, with much lower mileage standards. DE has higher standards for water contamination and purity. Advantage: DE

10. GDP and income: GDP is not an indicator of personal income, but many other responses mentioned it. GDP is slightly higher in the US Average income is also slightly higher in the US, but it ignores many factors, erasing the advantage, in my opinion. Income inequality is much higher in the United States. Advantage of us.

11. Military: many other answers mention this one. The clear advantage here is the US, but I don't see how that benefited me when I was living in the US.

13. Infrastructure: DE has a huge network of trains and the highway. The United States has a massive infrastructure spending deficit, which makes roads and bridges in very bad shape right now. The United States has a much better general aviation system. Internet and cell phone coverage is similar for both countries (could be much better!). Regulation in DE allows many mobile phone providers, Internet providers, and even electricity providers to compete with each other. Advantage: launch

12: Transportation: With buses, trams, subways, light rail, and long-distance trains, you can get from almost anywhere in DE to another using public transportation. If you live in most cities, you don't need a car.

Based on these points, I don't see how anyone would not agree that Germany is the clear winner.

I'll add my two cents here. My husband and I worked in the United States (me in Boston, my home in Albany) for 2.5 years and in Germany (Munich) for 2.5 years. We both work in scientific informatics: I work in academia and my husband works in industry.

(I also lived for 3 years in Austria, 2 years in Norway, 1 year in Sweden, 1.5 years in France). Of all the destinations we chose Germany, Munich as a place to settle and raise a family.

We chose Germany first and foremost for social security, especially as an immigrant and economic stability.

As an academic immigrant in the United States, he had a J1 visa. Was issued

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I'll add my two cents here. My husband and I worked in the United States (me in Boston, my home in Albany) for 2.5 years and in Germany (Munich) for 2.5 years. We both work in scientific informatics: I work in academia and my husband works in industry.

(I also lived for 3 years in Austria, 2 years in Norway, 1 year in Sweden, 1.5 years in France). Of all the destinations we chose Germany, Munich as a place to settle and raise a family.

We chose Germany first and foremost for social security, especially as an immigrant and economic stability.

As an academic immigrant in the United States, he had a J1 visa. It was issued for 1 year and I was only able to extend my visa from outside the US, not from within. I would have to commit to staying in US territory, or I would have to travel to my home country and request an extension, which could take weeks. I felt like a prisoner in the field.

At each immigration orientation session I was emphasized that I am in no way allowed to apply for any state / government support, and if I did, my visa could be revoked. I was a working immigrant, so I had to work, earn, pay taxes, but never ask for help. I felt treated like a workhorse, not a human being.

My husband is Mexican and works on a TN visa that was part of the NAFTA agreement. In addition to being Mexican in Trump's United States (I think it goes without saying how insecure he felt), and as with the J1 visa, we were concerned that our visa programs might be canceled.

Fortunately, applying for a green card was paid for by my husband's company, but we never got a decision in the over 2 years we've been there, and despite the money the company spent on attorneys to process our application. On the contrary, in Germany, given our high qualification, we can apply for permanent residence after 21 (max. 33) months of work here by completing an application without the involvement of any lawyer or without having to pay thousands; it is a simple procedure.

Money wise, we actually benefit from the move. My salary went up as I went from academia to industry. My husband's salary stayed the same. But we are spending 50% less per square meter on accommodation (and that is given that we live in one of the most expensive cities in Germany). We also spend much less on vacations. So our savings skyrocketed in Germany.

Besides a very rational argument, there is an emotional one. Every time I entered the United States, the border officer could bless or insult me, it really depends on luck. Once the officer thanked me for taking care of his health while working in the hospital. On another occasion the officer asked me:

"Where do you live?"

"Here" - I answered, not understanding the question.

“You only live here because we let you. Where would you live if we didn't? ", Said.

"I don't know ... Germany, I guess" - I replied ...

Some other arguments for leaving the United States and moving to Germany

- social health system. You do not need to have an additional budget for your health, everything is paid by insurance

- parental benefits: both parents get parental leave, up to 1 year, affordable or free kindergartens, free high-quality education

- freedom of movement - cheap holidays, cheap flights, diversity of cultures and the possibility of traveling with a Schengen visa to many places.

- Wide public transport network. Intra and long distance connectivity.

... and all those mentioned by others: German culture, political stability, food, beer (and oh what a great beer gardens), bread, urban infrastructure, pastries, friendship with dogs (important to our family member 4-legged), cleanliness, street safety etc etc etc

I looked at the link you posted. The United States has median wealth comparable to Germany's on that. All the other countries on that list have more than Germany.

Net wealth is the value of all your assets minus your debts.

Germany has a low homeownership rate compared to the other countries on that list. That in itself would represent a significant portion of the lower median wealth. Lower percentage of people own a house. And a house would represent very significant wealth for the average person.

That also means that more people pay rents per month. That amount of money is not built

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I looked at the link you posted. The United States has median wealth comparable to Germany's on that. All the other countries on that list have more than Germany.

Net wealth is the value of all your assets minus your debts.

Germany has a low homeownership rate compared to the other countries on that list. That in itself would represent a significant portion of the lower median wealth. Lower percentage of people own a house. And a house would represent very significant wealth for the average person.

That also means that more people pay rents per month. That amount of money does not generate any wealth and is not used for any other asset apart from rent, which is a consumable. For example, if you pay off a mortgage, then with each payment you are reducing your debt and increasing your wealth. But this does not happen when you pay the rent. You pay rent for the month and use the house for a month. No asset created for the rent payer. Therefore, it will affect the average wealth per person in a very significant way (but not the wealth per capita per person).

I also check the market share. Once again, Germany ranks very low on that. Which again leads to a reduction in average per capita wealth.

This also creates a ripple effect on other expenses.

So I guess if we looked at other assets as well, it would be a similar story.

In short, spending patterns in Germany are such that a smaller percentage of people invest in assets and a greater number of people spend on consumption. Therefore, this reduces your average wealth per person compared to a country with similar wealth per capita but where a higher percentage of people spend on assets.

And an example would be the Netherlands. According to Credit Suisse data from 2017, it has a per capita wealth of $ 204,045, while Germany has a per capita wealth of $ 203,946. So it is almost identical. But when it comes to average wealth per person, the Netherlands has it at USD 94,373 while Germany has USD 47,091, which is almost half. The Netherlands has a higher percentage of people who invest in the stock market. The Netherlands also has a higher homeownership rate.

A simple example I give, consider two people A and B. They both earn $ 1000 in a month. A spends $ 900 on his living expenses and buys $ 100 worth of stock. B spends $ 1000 on his living expenses. At the end of the month, assuming there was no movement in the stock market, A's net worth is $ 100 while B's net worth is 0 (we ignore any other assets for simplicity).

Now if you take 10 people, and suppose 6 of them are like A. And another group of 10 people where 4 of them are like A. In the first group, 6 people invested in assets at $ 100 each. In the second group, 4 people invested in assets at $ 150 each.

So if we take the groups, both groups have $ 600 of wealth. So your wealth per capita is the same ($ 60). But if we take the median wealth, the median wealth of the first group is $ 100 while the median wealth of the second group is 0.

Group 1: 100, 100, 100, 100, 100, 100, 0, 0, 0, 0

Group 2: 150, 150, 150, 150, 0, 0, 0, 0, 0, 0

This is a tricky question, particularly for politicians. On numerous occasions (and now in the wake of the pandemic), there are demands for a "higher income tax for the rich." Of course, then the frequent response from journalists and other rival parties is: "Who do you consider rich?" As any figure mentioned by the politician in that case would lead to criticism (the threshold would be considered too high or too low), a common response would be that "this would have to be defined in later discussions." The buzzword for such discussions is "Reichensteuer".

So let's find a "standard

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This is a tricky question, particularly for politicians. On numerous occasions (and now in the wake of the pandemic), there are demands for a "higher income tax for the rich." Of course, then the frequent response from journalists and other rival parties is: "Who do you consider rich?" As any figure mentioned by the politician in that case would lead to criticism (the threshold would be considered too high or too low), a common response would be that "this would have to be defined in later discussions." The buzzword for such discussions is "Reichensteuer".

So let's look for a "normative" answer, something that is codified in law. There is already a kind of "tax for the rich": any annual taxable income greater than 250,731 euros for a single person, or 501,462 euros for spouses evaluated together, is taxed at 45 percent (and the part of the income below that threshold on a sliding scale, ending at 42 percent as the “top” tax). It should be noted that "taxable income" is much less than "what you earn." Many items can be deducted from ordinary income, and people with a salary scale above 250,000 euros can surely afford a tax advisor to consult them on many legal possibilities to reduce the tax burden. Therefore, suppose that about 50 can be successfully deducted. 000 euros in that income range; So an annual income of around 300,000 euros would make you "rich" in that sense.

Another answer is given in an essay published by the Institut der Deutschen Wirtschaft; a highly reputable group of German experts.

In an article published just four days ago (Reich oder nicht reich?), They give a surprising answer:

Those in Germany who have 3,529 net euros available as a single monthly do not have to worry financially. But is that person also rich with this income?

Yes, according to data from the Socioeconomic Panel (SOEP), a periodic survey of around 16,000 private households. According to the data, a single person in 2017, no more recent data, was among the highest 10 percent income of this group with this net income. … SOEP's figures show that it is debatable whether the top 10 percent of earners can actually call themselves rich. …

However, if you ask German citizens what level of income is required to be considered rich, the results are even higher:

For most German citizens, the wealth threshold is only exceeded after a monthly net income of 7,000 to 10,000 euros. …

In the 2018 Social Sciences General Population Survey, for example, only 1.2 percent of respondents were in the 10th and top 10th scale.

To sum up:

  • Germans consider someone to be wealthy if that person has roughly twice the net disposable income that someone requires to be in the top ten percent.
  • Only about ten percent of the top ten percent think they belong in the top ten percent!

So what background does this have?

In this article: Reichtum: Wer zur Oberschicht gehört, says:

Couples without children living at home, who have more than € 5,294 net per month at their disposal, are among the richest ten percent in Germany. For singles the limit is 3,529 euros.

This does not seem like too much, but also here you have to be careful to understand it correctly. What exactly does "net per month available to you" mean? It is clear that taxes and mandatory social security contributions will have already been deducted, but what about housing or energy costs, or vehicle financing costs? No one would assume that the amounts that must necessarily be deducted for these costs are "available". However, it is up to everyone to choose whether they want to live in a two-room apartment, or a villa with a large garden, and whether they drive a Fiat 500 or a BMW 7, or whether the annual ticket for public transport. It's enough. The interactive calculator on the website makes it clear that everything except taxes and mandatory contributions,

In the same way, the institute emphasizes on a specific website (Einkommen und Vermögen in Deutschland und wie der Staat sie umverteilt.) That, in Germany, the "gap" between "rich" and poor "had not widened since 2005 in ahead, and that the so-called "Gini coefficient" is around 0.29 in Germany, which is not high in comparison. That said, the difference between "rich and poor" in Germany is not very large. Hence the rather low figure for the "top 10 percent." In other words, Germany is not a place to easily earn "a lot of money", but not a place where you are very likely to get really poor.

As you asked for “considerate”, which also has to do with perception: according to the article I linked to, on trend, Germans assume that the gap between “rich” and poor ”is larger than it really is. This is the opposite of the US, where people assume that the "gap" is not too high, while it is high, much higher than in Germany. In Scandinavian countries, people assume that the gap is not high and they are right.

On this website: Mittelschicht - Arm-und-Reich.de, the expert group considers that between 3.3 and 3.5 percent of the population is "relatively wealthy" according to its definition. And that definition is already quite sophisticated for the following reason:

Therefore, a single person, for example, is considered middle class if he earns between 1,560 and 2,920 euros net. Different limits apply to families because they have different needs. Therefore, statisticians use so-called needs-weighted net income. Behind this term is the idea that there is a difference between whether someone has a single house and has to finance each purchase, from the washing machine to the television, on their own, or if they live in a household with several people. Here many expenses are borne by several. Therefore, household income is weighted according to need: the first adult has a factor of 1, every other household member aged 14 and over has a factor of 0.5, and children under 14 receive a factor. of 0.3.

What might be unusual in this text, for example for Indians, is the implicit notion that adults in Germany almost never financially support their parents or siblings, since they already contribute to the social system that supports them.

Less consumerism and low capitalism.

Groceries:

My brother lives in New York. Since Covid19 started, your usual grocery bill in India has doubled.

For me, in Germany, commodity prices have stayed the same since this pandemic started.

Health care :

He went to a hospital for a little surgery. Without overnight stay, kept under observation for a couple of hours. I returned home the same day. Bill: $ 15,000.

In Germany, the same would have been covered in full through public insurance.

Rentals:

Cheaper rents are possible in suburbs only in the US Rents within cities are sky high.

In Germany, reasonable

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Less consumerism and low capitalism.

Groceries:

My brother lives in New York. Since Covid19 started, your usual grocery bill in India has doubled.

For me, in Germany, commodity prices have stayed the same since this pandemic started.

Health care :

He went to a hospital for a little surgery. Without overnight stay, kept under observation for a couple of hours. I returned home the same day. Bill: $ 15,000.

In Germany, the same would have been covered in full through public insurance.

Rentals:

Cheaper rents are possible in suburbs only in the US Rents within cities are sky high.

In Germany, reasonable rents are possible within the city. It is not necessary to travel hours from one side to get around the office.

Transport :

In America, you have to have a personal car to survive. Along with the costs of the car, it comes with insurance, fuel and maintenance costs. Public transportation is almost non-existent.

Germany is absolutely focused on public transport. Those who own cars also prefer to use public transport or bicycles when moving within the city. There are multiple transport options in the city: car sharing (Share Now, Miles, Sixt, We Sharing, etc.), shared bikes, shared bikes, electric scooters, etc. This works in Germany, due to the dedicated bike paths.

Job:

In the US, hiring and firing policy is the norm. Gig economy holds employees responsible for their own income without a safety net. For this, there has to be a premium that companies must pay.

In Germany, there is Arbeitlosegeld (unemployment benefit) for everyone (since everyone pays taxes), Kurzarbeit (reduced-time work) for those employees who cannot work full time with the current employer.

The above are absolute basics for living and working anywhere. The cost difference leads to a difference in wages, not only between countries but also within countries.

$ 250,000 is a good salary anywhere, not in Silicon Valley. The shame of Silicon Valley: living in a van in Google's backyard

$ 60,000 may be a good salary in Berlin, maybe not in Munich.

(A key underlying reason for the high wages is the high rents that employees must pay.)

If you want to talk about something about your career, connect with me at ——> LinkedIn

Take a look at my Medium articles

I share more posts related to the CDG career

Most of the answers so far seem correct for the most part in the US and EU median income sense, but I am guessing you are referring to relatively high income people and that makes some things very different.

To sum up what has already been said: United States, mostly low-quality government services (due to lack of funding), where available. Important expensive private services, such as health care and education. But, lower taxes and withholdings.

Example:

A 21-year-old COUPLE living in California, married, with a gross annual salary of 100,000.

Monthly gross payment $ 8,333.33
Federal withholding $ 1,200.42
So

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Most of the answers so far seem correct for the most part in the US and EU median income sense, but I am guessing you are referring to relatively high income people and that makes some things very different.

To sum up what has already been said: United States, mostly low-quality government services (due to lack of funding), where available. Important expensive private services, such as health care and education. But, lower taxes and withholdings.

Example:

A 21-year-old COUPLE living in California, married, with a gross annual salary of 100,000.

Monthly Gross Payment $ 8,333.33
Federal Withholding $ 1,200.42
Social Security $ 516.67
Medicare $ 120.83
California $ 586.71
CA SDI $ 75.00
Monthly Net Payment $ 5,833.70
An apartment in San Francisco costs about: $ 2000–3000 / m2 for a fairly small place.
Health insurance that covers it all: ~ $ 360 / m according to valuepenguin (that's for a really healthy person).
And then there's your ~ $ 200,000 college debt ...

So, from your six figure income (and that’s for less than 20% of the population) ends in about 2000 per month, before paying the scholar debt. That’s still good money, but not an incredibly lot of money, and remember, only 20% of the population has that income. For the rest, general costs are about the same (maybe many don’t have the college debt because they couldn’t afford it, but their income might be much lower than that then).

Same income (in euros, but let’s think it’s 1:1) in Germany:

GROSS 100,000.00 €

Solidarity surcharge 1,169.41 €
Church tax 0.00 €
Income Tax 21,262.00 €
Total taxes 22,431.41 €
Pension insurance 6,956.40 €
Unemployment Insurance 1,116.00 €
Health insurance 4,169.70 € (yearly, this equals to a monthly 347€, so it seems like it’s the same, but someone earning 30,000/y would pay only 205/m and still have the exact same access to unlimited healthcare, and someone unemployed would pay nothing and have the exact same access)
Care insurance 724.61 €
Monthly Net: 5,380€
Nice 3 bedroom apartment in Munich centre (I don’t put Berlin, because it’s cheaper): 1,800€ (in Nuremberg, 1,400€)
No college debt

You end up with 3,580€, and no debt to pay, and not much to worry if you are left unemployed because you would get about 60% of your last salary every month until you're employed again. And nothing to worry if you get sick, because the healthcare system is amazing. And public schools are really high quality, all of them. And when you have a baby, the state helps you pay for a nanny, and nannies are well payed, and are qualified, and have health insurance. And nobody fears the police.

In France is more or less the same, in Spain too, and I’m pretty sure every big economy in EU is more or less the same, but can’t say because I haven’t lived there.

All in all, to have the same in US, you have to have a significantly higher income, which is increasingly rare for the vast majority of the population.

Now imagine the difference it makes when your income is 50,000 a year per household ...

I have a hard time explaining why the pay is low in Germany, even though it has affected me. Still, I have my theories:

  1. My reasoning is that the work you are paid for is undervalued by those who pay you. German companies tend to discount a large number of factors that are critical to success, because they are neither visible nor measurable.
  2. Simple and hard skills are paid. However, as there is usually an excess supply, the money offered is low.
  3. If you are working on something that is very forward looking, you are likely to have great difficulty finding "buyers" for it. German companies often have their roots i
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I have a hard time explaining why the pay is low in Germany, even though it has affected me. Still, I have my theories:

  1. My reasoning is that the work you are paid for is undervalued by those who pay you. German companies tend to discount a large number of factors that are critical to success, because they are neither visible nor measurable.
  2. Simple and hard skills are paid. However, as there is usually an excess supply, the money offered is low.
  3. If you are working on something that is highly future-oriented, chances are you’d have great difficulty to find ‘buyers’ for it. German companies are often rooted in the present and as such fail to identify the intrinsic value of something new in the future. This translates to below average pay for such subjects.
  4. I also have the impression that for a large section of the German economy, employees are a necessary evil. This attitude and view affects pay as well.
  5. There is possibly also the culture factor. Big money was and is not seen in positive light in Germany.

That said, there are some German companies where pay is high, but not comparable with that of Swiss, Austrian, or even American companies. Even though one has a higher cost of living in Switzerland (as compared to Germany), one still has more money at disposal at the end of the day. The argument that low wages in Germany offset living expenses is nonsense at best, spurious at worst. Germany has high taxes and compulsory social contributions that makes cost of living very high in Germany.

Because <better country> is so hard to get in of course!

Well, that’s not 100% of the truth of course.

First of all, I would point out that a lot of countries have even lower salaries.

Second, Germany also has a low cost of living. And if you are not very ambitious in life, Germany is not a bad business. In many ways, Germany is a paradise for the average citizen!

If you don't earn much more than average, then you don't pay much more tax, and not as much tax overall compared to other countries. The government covers many things. Medical care is fine (maybe not great, but as the av

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Because it is very difficult to get into <best country>, of course!

Well that's not 100% the truth, of course.

First of all, I would like to point out that many countries have even lower wages.

Second, Germany also has a low cost of living. And if you are not very ambitious in life, Germany is not a bad business. In many ways, Germany is a paradise for the average citizen!

If you do not earn much more than the average, then you don’t pay much more taxes, and not that many taxes overall compared to some other countries. Government covers for many things. Healthcare is OK (maybe not excellent, but as the average Joe, you probably don’t care so much).

It’s also kind of a safe haven in some ways. At least it is not so likely that you will end up a in secret prison, be kidnapped etc.

Since I left Germany myself, I will certainly not convince you that Germany is the best country.

It’s quite a decent country though. Some people just either can not move to better countries (whatever that may be in your personal view) for legal/admin reasons or do not want to because they are fine with a good, but not excellent country, and just love some parts of the German culture.

La pregunta más interesante para mí es más bien: ¿Por qué tantos alemanes descontentos * se quedan * en Alemania a pesar de que les resulta bastante fácil mudarse a países que se adaptan mejor a sus preferencias y requisitos personales?

Hablaré desde mi propia experiencia.

Los ingresos en Alemania son en general bastante bajos. Y por "bonita" me refiero a todo lo contrario de "suficiente para comprar tu maldita comida".

Diese Karte zeigt, wo ihr mit Mindestlohn noch en Deutschland wohnen könnt

“Este mapa muestra dónde el salario mínimo es suficiente para vivir en Alemania”. El rojo indica dónde no es suficiente.

Se ve mal, ¿no?

Bueno, sí, ES realmente malo, y el salario mínimo es con lo que mucha gente tiene que lidiar en Alemania.

I am no exception here. Although I have a master's degree in a not completely useless field (German-Chinese-English translation

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I will speak from my own experience.

Income in Germany is generally quite low. And by "pretty" I mean the complete opposite of "enough to buy your damn food."

Diese Karte zeigt, wo ihr mit Mindestlohn noch en Deutschland wohnen könnt

"This map shows where the minimum wage is enough to live in Germany." Red indicates where it is not enough.

It looks bad, doesn't it?

Well yeah, it IS really bad, and the minimum wage is what a lot of people have to deal with in Germany.

I am no exception here. Even though I have a masters degree in a not completely useless field (German-Chinese-English translation). Reminder: it’s actually a job with which people used to make up to 4000€ a month, often more (since there were practically no Western people who spoke Chinese 15 years back, as well as Google translate).

A lot of companies are forced to be extremely stingy by policy. However, being stingy is a typical German trait as well, I might want to add, which is why I am personally quite unforgiving of stingyness when I see it in people, since I know that they are part of the game, and not in the least innocent. They just don’t realize it.

German people are miserable, and they are the very catalyst of their own misfortune.

I wouldn’t give answers on Quora too much credit, generally speaking, since the majority of members here are from the high-income stratosphere of German society. I claim that their point of view is very subjective and quite warped, an effect that is compounded by the fact that those people often don’t really interact with those found lower on the social-economical ladder.

I often deal with them because my expertise, job-wise speaking, is still hard to come by and European businesses who want to expand to China are reliant on guys like me (or rather on the network I can open up to them). And let me tell you, are those people disillusioned, condescending first world crybabies.

“There’s no more snow in Switzerland, can you believe it? What of our annual ski resort vacation! Climate change is so very disgusting. Look, it even makes me take a plane to Norway, just so my wife can look at some snow in winter! What? I am the one who is making everything even worse due to my lifestyle and travelling habits? Haha! Good joke, my dear man! More like, you meant my tenants who are struggling to even pay the rent I once more raised, because my kid needs his new gaming desktop pc every year! Damn, now that you’re reminding me, those computers are getting expensive! I need to teach that boy a lesson and make him eat oatmeal three times a day so he will be just as stingy as I am when he grows up!”

Luxemburg, Switzerland, Norway.

It's not very helpful to compare average net wages unless you compare purchasing power, in other words, how far does your euro / dollar / whatever goes? A pizza and a beer in Oslo, Norway costs € 30, so even if you earn a lot, you spend a lot.
Net wages adjusted according to PPP (purchasing power parity) give you a much better idea of ​​your theoretical standard of living. The gap between the poorest and richest countries is much smaller than what people generally imagine.
The EU countries with the highest purchasing power based on their average net salary are Luxembourg and Denmark.
A dane

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Luxembourg, Switzerland, Norway.

It's not very useful to compare average net wages unless you compare the purchasing power, in other words, how far does your euro/dollar/whatever go? A pizza and a beer in Oslo, Norway, is 30€ so even if you earn a lot, you spend a lot.
PPP (purchasing power parity) adjusted net wages give you a much better idea of your theoretical living standard. The gap between the poorest and richest countries is much smaller than people in general imagine.
The EU countries with the biggest purchasing power based on their net average wage is Luxemburg and Denmark.
A danish PPP-adjusted net average wage is circa 3000 €/month, a bulgarian PPP-adjusted net average wage some 1450 €/month.

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