Low wages across Europe

Hi, this is Hendrik from Datawrapper’s app team. I’ve spent many years doing essential but often invisible work in the backend of our tool. I'm also in charge of the mapping data behind our locator maps, computing web-suitable tiles from OpenStreetMap data.

In this Weekly Chart, I want to talk about low wages in Europe. Here's why:

Earlier this year, my family and I were sitting idle between two of too many meals at a family celebration. As time went by, our chatter turned political, and I caught myself making a bold claim: Germany must be annoying its Western European neighbors with its exceptionally large low-wage sector, especially the French with their well known strike culture and strong unions. I had read about that before, but I didn't have the article nor the data to back it up.

At that point, someone pulled out a phone and said they couldn’t believe this. The mean monthly income in Germany was close to 4,000 euros, the fourth highest in Europe. That doesn’t sound like a low wage, does it?

So here we are. After a long series of artsy Weekly Charts, I decided it was time for me to engage in some serious data journalism. What could be more interesting, then to dig up the data to back my bold claim. Well, or to deny it once and for all, if that’s what the data shows.

What do we mean by low wage?

To start off, let's clarify what we are looking for. Many countries and organizations (I used Eurostat here) define “low wage” as a salary below ⅔ of the national median income.

It’s important here to distinguish between the mean and the median:

The mean, which my family and I talked about, is defined as the sum of all considered salaries divided by the number of them. In short: The arithmetic mean.

The median, in contrast, is the salary of a middle earner, where half of the population earns more than that person and the other half earns less.

Using the mean in this context is not a suitable measure, because it is especially sensitive to the effects of extremely high salaries. Since there is no upper limit, rich people whose incomes are at the high end of the spectrum always skew the average upwards disproportionately, compared to low-income earners.

One country's low is another country's high

Still, ⅔ of the median national income can be a lot in a rich country. In order to fairly compare Germany’s low wage sector to its neighbors, we should start by looking for countries with similar conditions and living standards. Ideally, we would compare more than one dimension, but the median monthly income is a good start, a measure most of us can relate to.

We can see that Germany clearly belongs to a block of Western European countries with comparable median monthly incomes, including Germany, France, and even Italy to some degree.

It’s also noteworthy that the Swiss have double the median monthly income of Germany. I actually had to adjust the color scale a bit, so the difference between the other countries was still visible.

(For the curious reader, I have included data from 2022, 2018, and 2014. You can look at changes over time in different parts of Europe.)

Let’s use the ⅔ of the median definition to map out how many workers receive comparably low wages.

Now, this draws a whole different picture. In this chart, it's apparent that the amount of the workforce receiving low wages is about twice as high in Germany compared to its Western neighbors.

The formerly clear distinction between Eastern and Western Europe doesn't seem to apply here. In fact, Germany blends in better with the Eastern European block.

One might argue: Being a relatively wealthy country and having an extraordinarily large low-wage sector is not a contradiction. But it's not something to be proud of, either.

An effective tool for limiting the low-wage sector is said to be introducing minimum wage. But in order to be effective, they need to be pushed above the ⅔ of the median barrier. (I’m not going to get into that today, as it would be another story of approximately the same length.)

I’ll end my considerations this week with a line chart on the development of minimum wages from 2020 onward.

Hourly wages would be a good measure, because they make full-time and part-time work more comparable. Unfortunately, they cannot be easily compared to the median monthly income shown above. That is why I'd like to direct any interested readers to the Eurostat website which has a lot more data on the matter.

That’s it for this week. Come back next Thursday for a Weekly Chart from Jonathan!