Like the feeling of a hefty wage packet? Move to Switzerland. That's where you'll find the two cities with the highest-paid workers in Europe, according to a new survey of wages that was released on Wednesday. Residents of Zurich, in the German-speaking part of the country, earn an average $22.60 an hour after taxes, while Geneva's French-speaking citizens earn an average $20.40 an hour.
Salaries are not so first-rate in Kiev, Ukraine. It ranks last. Workers there earn a measly $2.40 an hour on average, or just over a tenth of what the Swiss earn.
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Behind The Numbers
The findings come from Swiss bank UBS ( UBS - news - people )' "Price and Earnings" survey that looks at purchasing power in 73 global cities. The data was compiled by surveying hourly wages in 14 different professions, taking into account working hours, paid vacation and legal holidays, and converting them into American dollars over six weeks between early March and mid-April 2009. The report measured net pay per hour, gross pay per hour, tax and social security contributions, vacation days and the number of days an employee would need to work to buy an 8-gigabyte iPod Nano.
In Depth: Europe's Best-Paid Cities
The rankings show a big gap in earnings between regions, with average hourly wages for Western Europe coming in at $20.20, and for Eastern Europe at just over a quarter of that, or $5.50. While car mechanics in Zurich earn an average $43,100 per year after taxes, their counterparts in Dublin earn $34,800, and in Warsaw they take home just $7,500. While a bank credit officer in Paris will earn an average $58,600 a year and work 35 hours a week, they'll earn $11,200 in Budapest, and work seven hours longer.
These kinds of gaps have barely budged in three years.
"It's not going to be a matter of years but over the next one or two decades that the standard of living becomes more uniform across the European Union," and wages in Eastern Europe catch up with the West, says Brian O'Reilly, director and global equities strategy at UBS wealth management.
Within Eastern Europe, there's also a large divide between public and private sector jobs. For instance, teachers in Moscow or Kiev will earn an average of $7,180 a year, while product managers in the private sector of those cities will make 2.3 times as much, at around $16,780. In Western Europe, you'll earn around $46,400 if you're a manager, but that's only 1.4 times more than what teachers in the region earn ($32,480).
One reason is that some of the top payers in Eastern Europe are not local, but multinational companies. "If we were a foreign multinational we'd be looking at Eastern Europe. The cost of living is a lot less," said O'Reilly. Workers are cheaper too.
Employers Choose Wisely
High wages in countries like Switzerland and Copenhagen have their drawbacks; they put off international companies from pitching their tents. It's almost certainly why Google ( GOOG - news - people ) set up an office in Wroclaw, Poland about three years ago (See Google's Pole Position). Eastern Europeans are simply cheaper to hire, effectively undercutting their Western neighbors.
On the opposite extreme, Denmark and Liechtenstein are the most expensive places to hire people, according to the London-based Federation of European Employers, which produces data on median international wages to help companies decide how much to pay their foreign workers. "A lot of our employer members have been moving into Eastern Europe," said Robin Chater, secretary general of the Federation of European Employers.
The biggest faller in the pay rankings is London. Three years ago the British capital was in the No. 2 spot, but now it has slid 19 places, to 21. The reason? The falling pound has made London employees for multinational companies around 25% cheaper in first half of 2009 than they were three years ago.
While that may irk Londoners, O'Reilly says this has actually helped make the city more competitive. London is already moving back up the rankings as the pound increases in value; sterling bought $1.40 in March but on Wednesday it bought $1.65.
Poles working in London were unlucky in the currency game after the Polish zloty gained about 8.5% against the British pound between March and April 2009. It meant that a Polish worker who might normally send, say, 200 pounds ($330) from the United Kingdom to Poland each month, would have had to work about one and a half extra hours each day to make up for the weaker pound, according to the UBS survey.
One final point to make about European wages, and it's one of the most aggravating for workers: Western European incomes are the most heavily taxed in the world, with the state, on average, taking 27.6% of people's salaries (although this is not far off the 26.2% tax burden on North American incomes). The city with the highest taxed incomes in Europe--and the world--is Copenhagen, where Danish workers must give up a whopping 46% of their income to the government. Next in line is Ljubljana, Slovenia, where the state takes a 39% chunk out of people's wages. By way of comparison, wages in New York and Los Angeles are taxed 28% and 27% respectively
Some of the least taxed cities in the ranking are Nicosia, Cyprus, at just 10%, along with Dublin and Moscow, where taxes only eat into about 15% of their citizens' gross income. One reason why Switzerland ranks at the top is that income taxes there are relatively low, at only 25% for Zurich and 30% for Geneva. (Switzerland's different regions, or cantons, also have varying tax rates.) While it's nice to have a generous employer, it helps to have a laid-back government too.