Why are the salaries in London so low?
The title says it all, anyone know why London's salaries are so low? And don’t tell me it’s because of Brexit because this isn’t new.
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Weak pound. We would be on par to the US if they were rebased on the current exchange rate.
The pound was worth 1.51 at all time high to 1:00 dollar. Now, it is worth 1.21:1:00. There is no way it will be like that again. I had a friend say that it's so cheap to go America due to the the dollar. The U.K basically screwed themselves over. We are still laughing, haha.
the pound was worth >2 on the dollar at its peak...
Like @Funx2192 says, last time the big banks set the salaries in Europe, the pound was strong and they didn't take into account cost of living. Our friends in Spain and Frankfurt are laughing at us. Well, the Frankfurt guys likely not so much laughing, but you get the picture.
I disagree. The Brits are getting a strong POUND in the ass from Brexit.
Now imagine working for the Big 4. I think your starting salary is like 25k....basically minimum wage. That's why the US trumps any European country (Except Switzerland) in terms of salary. You don't have to be the cream of the top to make a decent living in the US. Whether you are in the back office or front office, you will be just fine.
Germany is probably best for pay in Europe. Same salaries as London but much lower COL.
Germany sucks though
Starting salary for good jobs in Germany/Netherlands is 40k.
In The Netherlands, you also get a tax ruling on 30% of your salary the first 5 years of work (basically you are only taxed on 70% of your salary) as a foreigner. And there are no capital gains tax which is awesome imo.
Ever been in Switzerland, though? You can't compare that country with any other. Salaries may be higher, but cost of living is this much higher that its purchasing power parity is lower than of most countries in Northwestern Europe.
Cost of living is comparable to London, slightly above. But the thing is, even if you work back office, your starting salary is like 85k. Front office pulls in 100k. It's the best deal you can get in Europe.
It’s not that low. A friend (condolences /s) has a grad offer from EY London. It’s £33k for the first 2 years as they are still technically a trainee sitting the relevant accounting qualifications. Afterwards it jumps to £50k which is still extremely high relative to other subsets of the population
That's accurate for consulting and TAS, but Audit and Tax pay closer to 28k in London (24k in regional offices) which was probably what he was referring to. You are right though, even the starting salary is roughly equal to median of the UK population.
Do you happen to know what variable pay for Exec / AM / Senior Associate roles is at the CF arms of Big 4 UK? Looking for a few more data points to compare - thanks!
In terms of money, Frankfurt could be a good alternative. You will certainly earn more and you will definitely save more. On the other side, the city is terrible, a classic German tedious atmosphere + cultural component, especially if you are not a native of DACH region, even if you speak fluent German it is very hard to fit in (my experiences from internship and education in Germany)
At the end, most of my friends chose to go to London. Admittedly, you will earn less in the first few years but with IB career you will make a lot of money in your life even before the 30th birthday, salary in the first few years should not be crucial part of the consideration.
Berlin is better but still incomparable to the atmosphere in London/Italy/Spain/France.
A vice-president usually earns around 240k all in..... That’s nothing compared to NYC
You forgot this:
Consumer Prices in New York, NY are 40.36% higher than in Frankfurt Consumer Prices Including Rent in New York, NY are 84.43% higher than in Frankfurt Rent Prices in New York, NY are 176.13% higher than in Frankfurt Restaurant Prices in New York, NY are 51.40% higher than in Frankfurt Groceries Prices in New York, NY are 98.89% higher than in Frankfurt Local Purchasing Power in New York, NY is 8.16% lower than in Frankfurt
Bolded + you with 240k EUR all in/year as a top 1% earners of the country. https://www.numbeo.com/cost-of-living/compare_cities.jsp?country1=Germa…
Salaries in Germany are lower than in London and the only 2 people I know who started there moved to London in less than 2 years. The only country in continental europe where you have comparable if not higher salaries than London is switzerland (guys in market risk pull 100k chf 2 years in). But Frankfurt is lower. I read a comparison for Citi FIG a few months ago and avg pay for senior staff in Frankfurt was around 300k€ /yr whereas in London in was above 900k £.
I speak about comp for the first 5-6 years (Analyst, Assoc). As an analyst you will earn and save more in FFM. Assoc on par, but the money you saved has 1.5x more value in FFM compared to London.
VP+ level of course London - no brainer
Salaries in the USA are higher than anywhere in Europe, and also for pretty much every type of job. As has been rightfully pointed out before, this is largely due to the benefits we Europeans get. Here our (college) debts are lower, healthcare is cheaper, cost of living is lower, pension systems are better, etc. You don't need to save up a few 100k for unanticipated medical care. That's just crazy imo. In that respect, I like Europe much more than the USA.
On the other hand, if you make it in the USA you make it big, like pretty big. That's just capitalism at its finest. But if you don't make it at all, then you're screwed. Salaries here are a lot more leveled. If you end up working in banking, you're probably better off in the USA. But overall, quality of life is a lot better in Europe.
Health care is perfectly fine if you get the top plan in the US. You do not need to save up that much. It's like getting private health insurance in Europe, which the upper class get anyway since you don't have to wait for the whole country to finish their check ups before it's your turn.
Your last statement is incorrect. You have to wait like everybody else, because a huge amount of people have private health insurance, so you can't just skip the queue.
Most places outside California and New York in the USA have low cost of living. Also, I've never heard that anybody needs to save up a few 100k for unanticipated medical care. We have health insurance ya know.
And exactly how many people in the USA have a health insurance? Right...
Because salaries used be higher in London pre-crisis at 2 to the dollar and haven't really re-adjusted then because it's cheaper for the banks not to.
Simple answer, salaries in London have always been a bit lower. It is stark right now cause the exchange rate has gone from 2 to 1.5 (after 2008) to 1.3 (brexit vote). A Y1 IB Analyst is earning roughly £80k which is currently $104k but before brexit was $120K.
That latter figure is actually quite good when you realize that London analysts get 6 weeks off, slightly better hours, don't have insane college debt, and are in a continent that has less M&A activity.
Costs in London are just way lower, so whilst it seems FAR lower due to the exchange rate movements of the last two years (last time salaries were benchmarked cable was at 1.6, so around 2014, and it was a 1 to 1 match), it' actually not so severe.
Reasons: 1. Better QOL - you get more days off, and all the benefits of having some social safety nets for the people around you 2. Its cleaner. As above. 3. Money goes further. A new-ish non-luxury 3 bed in Brooklyn is $8-9k a month. A new, luxury 3 bed with similar travel time in London is $4-5k/mo including gym, pool, and amenities. 4. We have more competition within Europe, and it's actually a bit more meritocratic vs the US/NY where it's all elite schools and closed networks 5. Money goes further. Food costs are about half to two thirds. Same for drink. 6. Profitability is lower in London - that's a structural thing. Another point is less deal flow and smaller deals.
Here's some quality of life things you undervalue until you consider losing them: 1. London is way quieter, in a nice way. We don't have those shitty wailing sirens. 2. We're connected. We can get anywhere in Europe within 3 hours for under $100 return if booked a few months in advance. You can immerse yourself in a different culture at the drop of a hat. 3. NYC public transit systems, including airports, are ANCIENT to use (and the MTA stinks). Yes the London tube is old, but it's far quicker and more efficient. 4. Food - it's very diverse in London. 5. It's a bit more casual, yet more cultured.
This is what I think is a much better response to the low salary thing. Yes it is objectively lower in London compared to NY but that doesn't matter because of a) cost of living (though that depends on who you are I know lots of people who say they found it actually more expensive in London than NY) and b) the most important thing that everyone seems to be blinded from, lifestyle. Yes folks, London is actually a great place to live and culturally a bit more laid back and comfortable. Though the finance experience is probably not going to be as hardcore and therefore as good as in NY, it's not what everyone cares about. We're human beings that tbh don't really give a shit about anything but being able to live comfortably. A1 salaries are hardly the be all and end all.
Spot on with all points.. Disjoint as above salaries were benchmarked post-crisis around 2014 when street was raised to $85k.
Some of these points are simply not true and you are combining Europe and London which are quite different in terms of the job market.
Europe is NOT meritocratic at all. If you want a TOP job, just ask someone's rich daddy and you will get in. I can tell you the guys getting analyst positions at Mckinsey in Europe are all connected to a C-suite level executive either through their own parents or their friends' parents. These guys did not have to interview. They got the job immediately. London is more meritocratic in that regard because nepotism doesn't get you that far besides an interview with HR. London is extremely expensive for food and drinks. Pretty comparable to NYC. Groceries are the same as in the states. You can go Tesco's for cheaper stuff or Waitrose for high end. The tube doesn't have A/C and it's shaped like a sausage so you can't even stand up straight at certain ends. Every time you go down to the tube it feels like you are in a fallout shelter. It's so loud and dirty as well. NYC tops London food in every way.
Did you just try to put London's food scene over NYC? There's no way this is true
It depends on 1. What level? 2. What cuisine / what you enjoy?
I argue it's much easier to get great food in London for less than NYC at the lower to mid market - independents and not chains, however - and at the upper end then only Modern British/European. At the upper end, well, Michelin star is Michelin star and I'm not bothered for that... PA at least.
London's food scene has evolved like crazy the last few years and continues to do so. It's all subjective, and maybe I'm wrong, but it's at least narrowed considerably.
I've only been to NYC a few times, but, that disclaimer aside, London's food scene owns NYC hands down. So does Asia and most of Europe.
While I didn't go to the likes of per se when I was there (hugely overrated from what i've heard anyway), I did go to whatever places the rest of my cohort went to. All really not great and over priced. I don't even bother remembering their names.
Surprisingly, it was the mid tier to upper mid tier restuarants ($40 to $150 in my book anyway), that were pretty decent. But still not worth the money.
Literally everything else, cheap or expensive, that been hyped about in NYC was over hyped.
Except Levain Bakery's cookies
Some great points here - provided the pound remains weak in relation to the USD/EUR in the medium/long term to, is the a precedent for BB's to bump up bases's proportionally / reset them against the USD? Seems those based in non-LDN EMEA and paid in EUR essentially earn about c.10k more based on FX alone
BANKS DO NOT GIVE A FUCK - you're worse off too bad move to continental Europe (who would want to do that?), move the NYC to have a much worse life balance?
They will still attract top talent (or good enough talent to make money and close the deals they need to close).
Agree with all the points made so far, plus London has 5-6 weeks PTO
5-6 weeks off, even for S&T?
Especially for S&T - market dies in July/August. You have to take two mandatory consecutive weeks off thanks to Kerviel. Christmas market dies as well.
Agree with all that had been said so far. I would also add education costs, since Europe / UK universities are cheaper than in the US.
Murca
Some opinions by someone who has relatives who work in the US (2 of which in banking and tech):
Salaries weren't like this before 2008 and without the 2x salary max bonus some people made a killing (anyone here remembers Fabrice Tourre aka fabulous fab who cleared 1.7mm £ a year as a VP and he wasn't even 30 at the time) and they took another hit with brexit.
Food is subjective
The title says it all, anyone know why London's salaries are so low? And don't tell me it's because london salries is always low
Agree with what others have said. FX rate does not help but in general salaries for all jobs are much lower in the UK.
It used to piss me off but here at the facts:
I get 5 weeks paid vacation every year
If I get sick I can go to the doctor free of charge. I also have private health insurance through my work should something serious happen. I literally never have to worry about health care costs. I do a contact sport where I get a lot of minor scrapes. There is an A&E clinic across from my office. I go in and I am generally seen and treated in anywhere from 30 minutes to 3 hours. No excess...no out of pocket expense, even prescriptions are paid for (ok you need to pay £12 quid admin fee or something).
If I am sick, I take a sick day. With pay.
Culture significantly more chilled. If I've got an appointment I can take, if i have to leave early no problem, if I have to work from home OK. Obviously varies by employer but in general the work culture is so much better here.
My college fees were paid by the Government so I have zero student debt.
My employer pays a contribution of 10% of my salary into my pension plan. This is often not mentioned in salary figures.
When you take all that into account, I'd take the lower salary. I do not know how you guys can live with 2 weeks vacation. That would kill my soul.
don't you guys get taxed on literally every benefit though? ie. even employer-provided private health insurance is considered taxable income.
Also, most MNC companies provide really good health insurance benefits, wherever they are in the world.
would have thought that LN salaries are low because of the sheer amount of competition from talent across Europe, and Asia (from Intl students and all)
almost everyone in my analyst class had a masters and / or prior long term work experience before they joined my current firm as a 1st year analyst.
Low relative to??
US, even Asia.
I'm currently making only USD13k less in base pay than a london-based 1st year Associate in my firm. which isn't right because your largest pay increase comes in the step promotions
how does this pay differential manifest itself on the buyside where it’s generally not as structured?
Even lower than sell side
I was concerned about this but then I saw a pretty comprehensive data driven comp report from some headhunters and it doesn’t seem to be that bad. like I made $400k last year in the US distressed credit/HF land and am expecting the same in london. distressed analysts with 3-7 years experience averaged $400k median
well this could be Cus, schooling is basically free, NHS is free, the college tuition fee is wayyy lower resulting in lesser student loan debt soo obv when compared to US, salaries would be lower.
Christ, it’s posts like this that keep me really grounded. Tfw my 10-week London SA pay is literally ~ 50x the average monthly pay of an entry level job from where I’m from.
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