When I was in holiday in Krakow, we were with another couple, one Spanish, one Polish, who met and married in London. They’re quite far off retirement and were talking about how hard, financially, it is for them to live and work in the city. Saving for retirement is not top of their list of priorities.
“I envy my parents in Spain”, my mate stated, as we sat in some cellar bar. “They are on the state pension. Both were teachers. They retired in their early sixties and receive 1,800 euros a month each.”
I checked the beer I was drinking to see if the alcohol level was so high that it was affecting my hearing. Or was it affecting my arithmetic, because I was calculating that at around 22 grand a year in Sterling, at current exchange rates. Net. Each. That couldn’t be right.
“You mean 1,800 euros between them, surely”, I said, before adding “which will soon stop once you aren’t getting £8 billion in subsidy every year from the UK!” (well, I thought it was funny.)
“No, no, no. That is 1,800 euros a month. EACH. It is a good arrangement.”
I was trying to get my head around this when his wife joined in. “It’s a good arrangement when you consider the average salary in Poland is 350 euros a month. So their pension is almost six times what the average Polish worker earns.”
“That can’t be right either”, I said. “That must be 350 euros a week”.
“No, no”, she tutted. “It is 350 euros a month.”
I decided, as in all pub arguments, to go into Google for a quick search to see who was pulling my leg. Seemingly neither of them were. The state pension level in Spain is over twenty grand a year. Greece isn’t far behind, and Sweden is actually ahead of this amount.
Average monthly salary is a bit more difficult, but the Wikipedia page I checked states the average monthly salary in Poland to be around 750 euros a month – but that’s in the “enterprise” sector. My Spanish friend had actually challenged his wife’s number at the time, and she had replied that her number was correct, if you took into account all wages, not just cities like Krakow. (There is quite a bit of evident wealth in Krakow, which was why I was also struggling to believe her assertion.) Either way, however, it’s a pretty low number.
Now, this blog post could go off in a variety of ways, but the way it’s not going is any further in the direction of Brexit. It was quite a shock to me, however, to have two friends whose families are experiencing two totally different financial worlds within the European Union. Obviously I’m “aware” that different countries within Europe have different standards of living, but talking to people who have a real, live experience of it is a different thing entirely. It must throw up some challenges – for starters, you can guess which half of the couple is sending money home to their parents every month, and which one isn’t.
It’s all very complicated, so much so that I’m not even sure what the point of this blog entry is. Originally I was going to muse over the size of the British state pension and whether or not it’s enough in comparison to Spain’s, but that’s a pretty puerile exercise. And anyway, I don’t have any of the other factors that might play a part In the argument – I’ve no idea what the Spanish tax system is, nor welfare system, nor National Insurance system (if they have one). As for comparing the average wage in Poland with that of the UK, really, what can you say?
Writing this post, however, has brought home to me just how astonishingly rich Britain is in the grand scheme of things. Okay, that wealth isn’t distributed fairly throughout the country and we could do a lot better at spreading it around, but that’s a massive debate that I hardly even have the energy to consider. Spread it around where, for a start? In Britain? Poland? Africa? It reminds me of the Mr Money Moustache post about how lucky we are to live the way we do and why we should stop and think about that sometimes. It might help put our “retirement dreams” into perspective.
sex health money death 
350 EUR is a minimal, net, monthly salary in Poland right now (2017).
The most frequent individual earnings (the modal value) among employees is not much higher, as it’s ~450 EUR (net, per month).
Yes, it’s hard to make FIRE possible here.
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350 EUR is a minimal, net, monthly salary in Poland right now (2017).
The most frequent individual earnings (the modal value) among employees is not much higher, as it’s ~450 EUR (net, per month).
Yes, it’s hard to make FIRE possible here.
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Sobering information Kamil, but I have to say that the Polish people I spoke to were as optimistic as anyone here. There is also a sense of family and community, I felt, that takes precedence over money, money, money.
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People seem to be optimistic even in the poorest countries all over the world. The problem is, having such salary makes it quite difficult travelling to “rich, western countries” or getting newer car (prices are the same as in Germany, but salary is 4x smaller), that’s why average age of a car is 12 years here. Of course money isn’t the most important thing, but having it helps in buying some time and opportunities.
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I actually noticed that about the cars, comparing to the last city break I took in Munich where every car seemed to be a new Beemer, Merc or Audi. The other country I notice a much greater proportion of smaller cars? Scotland.
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Hi SHMD,
I’m sure it wasn’t intentional, but you sound quite condescending… I’m not sure there’s much you can learn from comparing a gold-plated defined benefit pension from one country to an average salary in another (currently €1076 gross), especially when you don’t account for costs of living (including rent and property prices).
Just to give you a different perspective, Spain was devastated by the financial crisis with unemployment rate raising above 20% percent and even now at 17% (with youth unemployment even higher). Pensioners in Greece often have to support the whole family since they are the ones with stable income (which is being cut by austerity). In comparison, unemployment in Poland is currently at 7%, and Poland has sailed through the crisis relatively unscathed while still maintaining decent economic growth.
Keep in mind that Poland adopted market economy only in 1989, so we have a lot of catching up to do. In comparison, Spain transitioned to democracy in 1975, so we have about 14 years to get there.
Regards,
Adam
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Hi, I think this post probably could be seen as condescending but, honestly, I wasn’t trying to be!
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An important consideration is the direction that the standard of living is going in. One of reasons there is so much disaffection in countries like the US, UK and Australia is that the cost of living is rising (especially really important things like housing, education, utilities etc…..) but wages, employment security and opportunity are going in the other direction. Many people feel frightened and pessimistic about what the future holds for them. As a personal example: two years ago my employer increased my weekly working hours from 43 to 59 hours a week for only a 7% pay rise – our underlying pay has not been raised with inflation for a number of years either. We have now been told that we will be out of work in a couple of years or so as the company is going to replace us with automation. My sector has been shedding jobs for a few years and that will most likely continue so other positions are rarely available. Wages for my role have been declining for a number of years too. The hourly wage for new starters is now considerably less that it was 7-8 years ago.
On the other hand when I ask people in rapidly growing countries that I travel to like Vietnam they are highly optimistic despite being much poorer. That is because their earnings and standard of living have risen so fast over the last few years. Every year they are clearly better off than the year before and they are confident that this trend will continue. They can invest in bigger purchases and in their future without fear.
It is not just the actual income level that is important but also the direction that that income is travelling in.
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The question is also what are the contributions for during the working life for the pension? I have quite a substantial pension entitlement from working in France for 10 years but the contributions for the employee and employer are huge. This is often what is forgotten when people talk about how poor the UK state pension is. It’s actually a very good deal considering how low the contributions are compared to those typically paid in other countries.
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I know what you mean. I worked for a French company and was amazed at what they were prepared to put in as their contribution to my pension. I had to put in a bit too, but it was just too good an offer from the company to refuse. As for our state pension, people who have contributed literally nothing will get pretty much the same as those who’ve put in full NI contributions (as I understand it, pension credits make up any difference.) I can’t decide whether this is a good or bad thing, to be honest.
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As an international haulier, I feel the effects of the difference in the Eurozone economies. If you feel like donning an anorak
Click to access Comparative-study-of-employment-and-pay-conditions-of-international-lorry-drivers-in-Europe.pdf
Though in a nutshell:
“The same hour’s driving in the same lorry
on the same road with the same goods can cost
€8 per hour or €33 per hour depending on
whether the driver is employed by a Bulgarian
company or a Belgian company. This is not a
negligible difference: it is a 4-fold gap”.
And explains why market share has gone from around 80% in the early ’90s to 12.6% last year. As cat 793 says, the direction you are travelling in definitely gives you different perspective on how you are doing financially.
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