Setting income expectations: the average salaries in Germany

Marle

Aug 19 • 8 minute read

"You don't talk about money" might be the most common answer when you ask your colleagues about their salary. It's tough for expats to get a real feel for a fair salary - and a solid base for your next salary increase negotiation.

So, what's the average salary in Germany? And even most importantly, what is a good salary in my industry, sector or position?

Let’s wipe away the dusty "you don't talk about money"-mentality and create more financial transparency for you, so that you can ask for a fair salary as an expat or an intern. Let us have a look at how average salaries vary according to career field and what regional and demographic differences still exist when it comes to salaries. To avoid disappointment in the beginning of the month, we'll walk you through your payslip to set the right expectations for your gross and net salary.

A good salary comes with an average gross salary of €70.754

Fair is fair: as an expat you ought to receive fair compensation. According to the StepStone Salary Report 2020 (Stepstone Gehaltsreport 2020), the average gross salary in Germany amounts to 58.800€.

Another salary study conducted by the online job portal XING estimated an average gross salary of €70,754 but they include bonuses, holiday and Christmas allowances. At any rate: there’s a heap of money ahead of you!

However, this is of course just a snapshot of the German average: salaries differ depending on the region, the industry and the size of the company. As Stepstone points out, large companies (+10,000 employees) in Germany still pay the most salaries – a whopping 27 percent above average!

Medium- to large-sized companies (5,001 - 10,000 employees) top the average gross salary by 17% and medium-sized companies (1,000 - 5,000 employees) still exceed the average by 12%. So, remember: The bigger the company, the higher your salary is likely to be.

Everyone deserves the minimum wage in Germany

Well, almost everyone! In Germany, the Federal Ministry of Labour and Social Affairs (BMAS) has introduced a statutory minimum wage to protect employees for unfairly low wages – and to ensure that competition between companies won't have a detrimental effect on employees. The other plus is that the minimum wage can therefore safeguard greater social stability.

As of January 2020, the minimum wage has reached €9.35 gross per hour. The minimum wage level reflects the economic situation and the general trend in salary rates. Oh, by the way, minimum wage also applies to overtime, as long as it’s not balanced out as time in lieu!

In fact, did you know that even interns are entitled to a minimum wage? Once your internship exceeds 3 months and your internship is not compulsory at university, you're not a volunteer or in an apprenticeship, you'll receive €9.35 gross an hour.

So, let's do simple math: with a 40 hour week you'll easily earn 1.620€ per month! For all but a number of professions (long-term unemployed, freelancers and self-employed) all employees are covered by the minimum wage, including expats, foreign workers, part-time workers and - as mentioned - interns.

Work experience and educational background sustain top earners

The years of work experience, job position and education make a significant difference in salary. It's no secret that a manager typically earns more than non-executives.

This means that a person in a management position makes an average of €74,700 compared to someone without a management role (€50,300). The gap between two groups is just as noticeable when it comes to educational achievements: academics receive an average salary of €67,400 as opposed to non-academics who earn €49,700.

Your career choice determines your salary

The complex curriculum that involves a great deal of responsibility is usually rewarded with a generous salary: doctors receive the highest salaries (€92,200 gross), followed by lawyers (€77,900). The scientific and technical expertise of industrial engineers means they are paid a gross salary of €72,400.

Are you drawn to Frankfurt to take your first steps in banking? Good choice, because banks pay about 19% above the average gross salary, followed by pharmaceuticals (+18%) and the automotive industry (+17%).

StepStone has compiled a detailed study which looks at the salaries of various professional fields. Ready to check out the real gem in your career field?

Banking and finance: €68,300 average gross salary

  • Top industries in banking and finance:
    • Automobile: € 85,100
    • Mechanical engineering: € 84,100€
    • IT: €81,700
    • Electrical engineering: €79,800
    • Energy: €78,500

Consulting: €63,900 average gross salary

  • Top industries in consulting:
    • Telecommunications: € 70,800
    • Mechanical engineering: €69,900
    • Banks: €69,200
    • Insurance: €68,200
    • Consulting: €67,100

IT: €60,500 average gross salary

  • Top industries in IT:
    • Consumer goods: €71,400
    • Banks: €71,000
    • Auto: €69,400
    • Pharmaceuticals: € 67,900
    • Financial service provider: € 67,900
    • Metal industry: € 67,500

Procurement & Logistics: €51,500 average gross salary

  • Top industries in procurement & logistics:
    • Auto: €62,900
    • Mechanical engineering: €61,900
    • Pharmaceuticals: €61,000
    • Medical technology: €60,800
    • Chemistry: €60,300

Human Resources: €58,400 average gross salary

  • Top industries in HR:
    • Banks: €73,300
    • Mechanical engineering: €71,500
    • Chemistry: €71,500
    • Auto: 68.700€
    • Metal industry: €66,800

Marketing: 60.200€ average gross salary

  • Top industries in marketing:
    • Pharmaceuticals: €74,300
    • Chemistry: €71,800
    • Auto: €73,200
    • Banks: €69,400
    • Mechanical engineering: €69,800
    • Electronics: €68,100

Sales: €63,800 average gross salary

  • Top industries in sales:
    • Banks: €63,800
    • Pharmacy: €76,000
    • Auto: €76,200
    • Chemistry: €73,100
    • Mechanical engineering: €72,900

Engineering: €64,500 average gross salary

  • Top industries in engineering:
    • Chemicals: €70,200
    • Print & Paper: €68,400
    • Auto: €68,500
    • IT: €66,600
    • Pharmaceuticals: €67,000
    • Food: €66,100

It’s the South that pays the highest salaries

Say, did you know that there are still major gaps in salaries within Germany? You still receive lower salaries in the East than in the West. Whereas the south, on the other hand, boasts the most generous salaries; according to the most recent XING salary survey, the highest average gross annual salary of €76,972 is paid in the state of Hesse, followed by Bavaria (€75,931) and Baden-Württemberg (€72,526). The bottom of the league is formed by Mecklenburg-Western Pomerania in the north with an average gross annual salary of €52,959. So it's good to compare cities to decide which one's the best to live in for you.

This distribution of peak salaries among the southern states is also reflected in the top 3 highest-earning cities: Frankfurt am Main accounts for the largest average gross salary at €71,000, followed by Munich (€67,400) and Stuttgart (€66,400).

Asking yourself what the rationale is behind this? There’s a simple explanation for this wide distribution of salaries. In the federal states or cities where major corporations have their headquarters, higher salaries can be found. For instance, numerous companies in the automotive, high-tech or consumer goods industries gather in the Stuttgart area; Frankfurt is the financial hub with its airport and trade fair, and many media houses and consumer goods companies have their homes in Hamburg.

2020 and the gender pay gap is still palpable

It's 2020 and one would assume that the gender pay gap between men and women is slowly fading. Unfortunately, the answer is: no.

According to a survey by the Federal Statistical Office of Germany, men earn an average of €3,964, while women earn considerably less, at €3,300.

The XING study also highlights the fact that women still earn far less than men in all professional fields; in most cases, they only receive three-quarters of what men earn.

Get a grasp of your payroll, know your net worth

The moment you'll look at your first salary in your bank account, you may feel a little disappointed. After all, tax rates in Germany are relatively high compared to other countries, so the difference between gross and net salary might come as a little surprise to you as an expat.

Let's start by clearing up the difference between gross and net salary: The gross salary (Bruttogehalt) is your monthly salary without deductions. It is also the sum that was agreed in your employment contract. The net salary (Nettogehalt) is ultimately the amount paid into your account. This is the pure salary from which income tax, social security and other payments have already been deducted. Income tax is usually around 35% (which varies depending on the gross salary). In other words: If you have a gross salary of about 3,000€ you will receive about 1,900€.

At the end of the month you'll be issued with a pay slip for your tax return. And this will most likely be in German. Don't worry: we'll walk you through the sheet of paper step by step so that you'll understand it in no time at all!

1. Employee data: Your personal details are recorded here, such as your full name, date of birth, tax and social security details.

2. Presence overview: Your vacation and working hours are recorded in this field. So you can see your exact times of absence.

3. Address field: Your address should be here, but also your staff number and maybe department number. You’ll also find the address of your employer here.

4. Accounting details: The cost centre, working hours, hourly wage or notes on parental leave are recorded here; all additional values, so to speak.

5. Gross pay: This list shows you, line by line, the breakdown of your monthly pay. This includes your hourly wage, holiday pay, vacation pay, and is always linked to tax and social security obligations. Oh, a note: "****" indicates further information from the payroll office.

6. Tax/Social Security: This section shows you exactly why your generous gross salary has shrunk dramatically. Here you'll find a list of income tax, church tax, solidarity surcharge and other tax deductions.

7. Net salaries/net deductions: Right at this point you can see what you should ultimately receive on your bank account. Should there be other contributions listed here, these will be added or deducted from your net income. So, here is your net income! 8. Payout sum: Read it one more time here: your net income. Make sure that you have received this amount in your bank account.

9. Bank details: Your salary didn't roll in on your bank account? Then have a look here to see if your bank details are correct.

10. Total costs for employers: Your employer usually lists the total costs (e.g. social security contributions)

11. Certificate of Merit: All accrued gross pay and deductions that have arisen in this employment relationship are listed here.

12. Footer: Small print to explain all abbreviations and legally-required information here.

13. Company pension scheme (bAV): The contribution you have made to the pension fund is indicated here. This contribution is not subject to tax; it is deducted directly from your net income.

Know your worth and the salary you deserve

"You don't talk about salary", whoops, that's what we did. Now you're all set for your first salary negotiation. The average gross annual salary in Germany is €70,754. Yet that's only the average: salaries vary by region as well as by professional field and experience. Broadly speaking, employees in the South make considerably more than in any other part of Germany. This is primarily the result of many major companies that have settled there. Hesse, for example, leads the list with the highest average gross salary at €76,972, closely followed by Bavaria (€75,931) and Baden-Württemberg (€72,526).

If we take a closer look at the industries, the employees in banking earn 19% above the average gross salary, next are those in the pharmaceutical industry (+18%) and automotive (+17%).

One thing that’s the same in all federal states: you are entitled to the statutory minimum wage. Since January 2020, the minimum wage has been €9.35 per hour and even applies to interns (under certain conditions)! Now, go explore your job opportunities in Germany!

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