Burdened Rates Provide Apples to Apples Comparison

Salary levels as well as benefits vary widely across Europe. If you have operations in a number of countries, it is easy to compare salaries to see which location is “cheapest”, but looking at salaries alone will not give you the full picture. Working hours, number of holidays, vacation days and average sick days plus employer-paid benefits all play a role.

Many companies use a concept called “burdened rates” in order to have a real apples to apples comparison of labor rates in different countries. (For one definition of burdened rates, see this page from the US Department of Energy.)

The results of the burdened rate calculations may surprise you. Italy is often considered low cost in Europe, but when you add in benefits the picture changes. UK, on the other hand, has lower benefits and may come out with lower burdened rates than Italy. In the past, my experience has shown that Germany was close to par with the US, but current exchange rates has changed all that. US is now a Low Cost Country (LCC) compared to Europe.

Here is a resource on European working hours.

In a previous post, I discussed sick days.

Image from management.energy.gov