Annual wages across Europe continue to show a sharp divide between higher-paying northern and western economies and lower-income countries in the south and east, according to new figures from the Organisation for Economic Co-operation and Development.
The OECD’s Taxing Wages 2026 report found that average annual gross salaries in Europe ranged from €18,590 in Turkey to €107,487 in Switzerland, making Switzerland the only European country where average wages exceed the €100,000 mark.
Iceland ranked second with annual wages of €85,950, while Luxembourg recorded the highest pay levels within the European Union at €77,844. Denmark and Netherlands completed the top five, with average wages of €71,961 and €69,028 respectively.
Among Europe’s largest economies, Germany led the way with average wages of €66,700, closely followed by the United Kingdom at €65,340. The figures for France, Italy and Spain were considerably lower, standing at €45,964, €36,594 and €32,678 respectively.
The report highlighted the continued gap between western and eastern European economies. Slovakia recorded the lowest wages within the EU at €19,590, while countries including Hungary, Latvia, Poland and Portugal all remained below the €25,000 threshold.
Nine EU countries reported average annual wages under €30,000, underlining the scale of income disparities across the bloc.
Economists say wage differences are shaped by productivity levels, industrial structure, labour market systems and living costs. Countries with strong finance and technology sectors, along with extensive collective bargaining systems, generally report higher salaries.
When wages are adjusted for purchasing power parity, which measures what salaries can actually buy in each country, the gap between European nations narrows noticeably.
In PPP-adjusted terms, Switzerland remained at the top with wages equivalent to 106,532 international dollars. Germany climbed significantly in the rankings, moving from seventh place in nominal terms to second place after purchasing power adjustments were applied. Luxembourg and the Netherlands also ranked highly.
Turkey saw the biggest improvement after the adjustment, jumping nine places from the bottom of the nominal wage rankings to 18th place. Analysts said lower living costs boosted the purchasing power of Turkish salaries despite relatively low nominal incomes.
By contrast, Iceland experienced one of the largest declines in PPP rankings due to its high cost of living, dropping from second to ninth place.
The OECD figures are based on full-time employees in sectors including manufacturing, retail, finance, construction and transport. Agriculture, education, healthcare and public administration were excluded from the calculations.
The report also noted that differences in income tax systems across Europe mean take-home pay can vary significantly even among countries with similar gross salary levels.
