How the big 5 European economies compare on 2025 employment costs

If you’re hiring across Europe (or planning to), there’s a good chance you’ve looked at your talent options in one of the big five economies: Germany, the UK, France, Italy, and Spain.

But while these countries all collectively account for a significant portion of European GDP and employment opportunities, the financial realities of hiring in these locations vary dramatically. These are differences that could impact your entire hiring strategy.

Using a benchmark salary of €60,000 gross annually, we examined the total employment costs employers face and the net pay employees actually take home across these five economic powerhouses. The results reveal some striking disparities that companies hiring in Europe should know about.

Here’s a breakdown of the costs that employers would face hiring on a €60,000 gross annual salary in the five major European economies:

• France: €95,303
• Italy: €88,326
• Spain: €79,637
• Germany: €74,724
• United Kingdom: €66,643

The difference between the most expensive (France) and the least expensive (United Kingdom) major economy works out to be almost €30,000 in added employment costs for the exact same salary.

The story is also extremely varied on the other side of the hiring equation, with employees receiving a wide range of take-home pay from the same initial salary package:

• United Kingdom: €46,245
• Germany: €39,679
• France: €39,501
• Spain: €39,026
• Italy: €35,963

From a €60,000 salary, an employee in Britain takes home around €10,000 more per year in net pay compared to their Italian counterparts. That’s close to a 29% difference.

The United Kingdom’s employee-friendly tax structure is clear to see when compared to other major economies. UK employees retain 77.1% of their gross salary, which is significantly higher than the European average among these five markets. In fact, the UK ranks as the 11th best country for employee take-home pay in our entire study of 36 countries.

Back to the employer costs side of things, it’s helpful to look at the cost-to-net-pay ratio to get a clearer picture of the relationship between what employers pay and what employees receive.

For every €1 your employee takes home, here’s how much you need to spend in total employment costs.

• United Kingdom: €1.44
• Germany: €1.88
• France: €2.41
• Spain: €2.04
• Italy: €2.46

Why this matters: Imagine you want to give one of your employees a €1,000 net pay increase. In the UK, this means you’d need to budget about €1,440 in total costs.

In Italy, that same €1,000 boost to your employee’s take-home would cost you €2,460. That’s a €1,020 difference in what you need to spend to achieve the same result for your employee.

This efficiency gap becomes an important consideration when you’re planning salary increases, competing for talent, or trying to give meaningful raises that actually impact your employees’ lives.

Looking at these major European economies, some interesting patterns emerge. The UK consistently offers the best value proposition. It provides both the lowest employer costs and the highest employee take-home pay among these five markets. Meanwhile, France and Italy present a double challenge: high costs for employers paired with lower net pay for employees.

Perhaps the most important takeaway is how employer costs don’t always translate to employee benefits. France has the highest employment costs but ranks middle-of-the-pack for employee net pay, while the UK delivers the best employee outcomes at the lowest employer cost.