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Understanding What Constitutes a Good Salary in Germany: An In-Depth Guide

Understanding What Constitutes a Good Salary in Germany: An In-Depth Guide titlecard

Are you planning to work in Germany and wondering what constitutes a good salary? You’re not alone. According to Glassdoor, the average gross wage in Germany for 2023 is €43,842 per year or €28,680 after-tax for a single person, which translates to a monthly net income of €2,390. However, a monthly net income of €2,500-3,500 is considered a good salary in Germany.

In this blog post, we will explore what is considered a good salary in Germany, the average salary in Germany, the minimum wage, salaries of different professions in Germany, factors that affect salary in Germany, and tips for negotiating salary in Germany. But first, let me share with you a personal experience.

Did you know that €60,000 is a good salary in Germany? It’s enough to cover your expenses for a year. I was having a conversation with a local friend about salaries in Germany. He casually mentioned that he earns €60,000 per year. I was surprised and asked him if that was considered a good salary in Germany. He laughed and said, “Yes, it’s more than enough to live comfortably here.” That’s when I realized that a good salary in Germany is not just about the number but also about the purchasing power it provides.

Check out: Highest-paying jobs in Germany in 2024 (no degree).

What is A Good Salary in Germany in 2023?

Business employee receives salary

So what is a good salary in Germany?

According to the latest official statistics, the average salary in Germany was 49,200 € gross per year. However, this figure varies greatly depending on the industry, region, and gender. For instance, the highest average salary was in Hamburg (60,000 €), while the lowest was in Mecklenburg-Vorpommern (36,000 €). Similarly, men earned, on average, 21% more than women, and workers with a university degree earned 73% more than those without.

The cost of living in Germany also depends on where you live, as well as your lifestyle and personal preferences. In general, the average monthly expenses in Germany can add up to €1,698 for a single person or €3,561 for a family of 4. However, these averages can vary depending on where you live, as rental prices are higher in cities popular among expats. For example, the average rent in Germany is €800 per month, but it can range from €1,219 in Berlin to €2,017 in Munich for a furnished 85 m2 apartment in an expensive area. Other major expenses include utilities, transportation, food, and healthcare.

The Average Gross Salary in Germany

The whole amount of money a business pays an employee before deducting any taxes or fees is known as the gross salary. It’s the entire compensation, or fixed earnings, that an employee is paid for carrying out tasks on behalf of their employer.

Gross pay is a total compensation that can be expressed as a monthly or yearly amount, including tips, bonuses, commissions, and wages, among other kinds of income. The gross salary is assigned and documented during the work term. 

The national average gross salary in Germany in 2023 is €51,009, according to the most recent study compiled by GEHALT.de. This is a 3.7% rise from the 2021 number of €49,200, released by the Federal Statistical Office. This amount can change, especially if the employer deducts several fees and taxes. The average gross salary differs from the average salary in Germany after tax deductions.

The table shows the average gross annual salary in Germany by profession and region in 2023

Salaries in the US vs Germany: Where Will You Make More?

The Average Salary in Germany After Tax

Gold coins and cube block tax on seesaw

The average pay after taxes is referred to as net income in Germany. After deducting all relevant taxes, this is the amount that a person gets. Germany has a complex tax structure that has a big impact on people’s net income, especially for foreigners and expats.

The German tax system is progressive, meaning the rate of tax increases as the taxable amount increases. A report by livingingermany.de said that for an individual with an annual gross salary of €50,000, the net income would be approximately €30,800 per year or €2,560 per month after tax deductions. These deductions include income tax, solidarity surcharge, and, if applicable, church tax.

The net salary is also lower if you are earning the minimum wage.

Are you planning to work as a part-time employee? Check this blog post about the Average Salary for Part-Time Jobs in Germany

What Is The Minimum Wage in Germany?

The minimum wage in Germany for 2023 is set at €10.45 per hour, according to welcome-center-germany.com. This equates to a minimum gross salary of approximately €1,672 per month, assuming a standard full-time work week of 40 hours. This translates to an annual gross salary of around €20,064.

Is the minimum wage enough to cover the expenses in Germany? Well, the answer to that can vary greatly depending on several factors, such as location, lifestyle, and personal spending habits.

What Is The Maximum Salary in Germany Per Month?

The maximum salary a person in Germany can make varies greatly based on their line of work. It’s crucial to remember that there isn’t really an upper limit to how much someone can make, so the phrase “maximum salary” is a little deceptive. But compared to other professions, some tend to have greater average salaries.

For example, in Germany, the highest-paying professions bring in at least a monthly salary of €7,000 on average. The monthly pay shown here is an estimate for these professions; real earnings may vary based on a number of factors, including region, experience level, and particular employer.

What Is a Good Salary in Hamburg, Germany? [2023]

Is 80000 Euros a Good salary in Germany?

Is 80,000 Euros a good salary in Germany? Well, it is considered more than comfortable in Germany because it is well above the average cost of living for different types of households. According to Numbeo.com, a family of four estimated monthly costs are €3,496.3 without rent, and a single person’s estimated monthly costs are €1,023.9 without rent. This means that a family of four would need €41,955.6 per year, and a single person would need €12,286.8 per year to cover their basic expenses.

What Expats Need to Know About The Taxes in Germany

taxes concept displayed on a calculator

If you are planning to work in Germany as a foreigner or expat, there are some things you need to know about the tax system in Germany. Here are some of the main points:

  • Germany has a progressive income tax system, which means that the tax rate increases as your income increases. The income tax rates range from 0% to 45%, depending on your taxable income and tax class.

  • According to Wikipedia, you will also have to pay a solidarity surcharge of 5.5% on your income tax. This is a tax to support the development of the former East Germany. Additionally, if you are a member of a church, you will have to pay a church tax of 8% or 9% of your income tax, depending on the state you live in.

  • You will also have to pay social security contributions covering health insurance, pension, unemployment insurance, and long-term care insurance. Tk.de reported that the total social security rate is 40%, but it is split equally between you and your employer. This means that you will only have to pay 20% of your gross salary as social security contributions.

  • You will have to file an annual tax declaration (Einkommensteuererklärung) if you meet certain criteria, such as having more than one source of income, receiving income from abroad, or being self-employed. You can file your tax declaration online or by mail, and you may be eligible for various deductions and allowances, such as for childcare, education, or charitable donations.

  • You will have to pay taxes on your worldwide income if you are considered a tax resident in Germany. You are a tax resident if you have a permanent place to live in Germany or if you spend more than six months in Germany in a calendar year. However, you may be able to avoid double taxation if Germany has a tax treaty with your home country.

These are some of the basic aspects of the tax system in Germany for foreigners and expats. However, the tax system in Germany is complex and may vary depending on your personal and financial situation. Therefore, it is advisable to consult a tax professional or use a tax service to help you with your tax matters in Germany.

Can’t decide what course to take in Germany? Read our article: Which Course Is Best To Get a Job in Germany?

Average Salaries of Different Professions in Germany

Senior doctor using his computer

The yearly gross salary in Germany is quite competitive, especially in the medical, engineering, and financial sectors, which are among the highest-paid professions. These top-tier jobs offer an average wage of at least €55,475 per year, according to erudera.com, translating to a substantial monthly salary. This figure significantly surpasses the average wages in many other European countries.

To give you a better idea, here are the average income of different jobs in Germany – updated 2023.

Doctors – €78,317 to €101,696 Per Year

The medical profession in Germany offers promising opportunities. A report by ISL Sprachschule said that a specialist in a hospital can earn a median salary between €65,000 and €85,000, while a head physician can earn between €100,000 and €280,000. This is significantly higher than the average salary in Germany.

However, it’s important to consider the minimum salary and the cost of living in Germany. Also, remember that these are gross salaries, so paying taxes will reduce the net income. Despite this, the salaries in the medical field are still attractive compared to many other professions.

Finance and Banking – Average Salary of €84,059 Per Year

Finance and banking professionals are among the highest-paid workers in Germany, with an average salary of €84,059 per year, according to averagesalarysurvey.com. This is well above the minimum wage of €9.60 per hour and the average income of €47,923 per year in Germany.

Finance and banking professionals can find many opportunities in Germany, as the country is home to some of the largest and most influential financial institutions in Europe and the world. Frankfurt is the main financial hub of Germany, where the European Central Bank, the Deutsche Bundesbank, and many other banks and financial services firms are located

However, finance and banking professionals also face a high income tax rate. Taxfoundation.com said that it can reach up to 45% for the highest earners. The taxable income is calculated after deducting social security contributions, health insurance, and other allowances. Therefore, the net monthly income of finance and banking professionals may vary depending on their personal circumstances and deductions.

Engineer – €49,000 to €103,000

Engineering is a highly respected profession in Germany, offering excellent opportunities. The average annual salary for a mechanical engineer is around €67,000. Entry-level engineers earn around €49,000, while senior engineers can earn up to €103,000 per year.

Engineers with a master’s degree or a doctorate earned more than engineers with a bachelor’s degree or a vocational training. And engineers with more than 10 years of professional experience earned more than double the salary of engineers with less than two years of experience.

But keep in mind that not everyone earns the same salary, as it varies based on experience and specialization. It’s also important to consider the minimum wages. Additionally, part of the salary goes towards unemployment insurance, providing a safety net for professionals.

IT Professionals – €65,000 to €80,000 per year

IT professionals are in high demand in Germany, as the country has a strong and innovative IT sector. There are many opportunities for IT professionals to work in different fields, such as software development, web design, system administration, project management, quality assurance, technical writing, and security.

To become an IT professional in Germany, one usually needs a university degree in computer science or a related field or a vocational training certificate in IT. The average salary of an IT professional in Germany depends on the position, experience, and location.

The following are the average IT salaries per month in Germany (EUR, before taxes) for different positions, according to joberty.com:

  • Software developer 3,320 – 4,430

  • Back-end developer 3,360 – 4,839

  • Front-end developer 3,110 – 4,400

  • Full-stack developer 3,520 – 4,840

  • DevOps Engineer 3,510 – 4,960

College Professors – €79K – €140K

According to Glassdoor, the average salary for a professor in Germany is reported to be around $93,655 per year. However, this figure may vary depending on the type of institution, the rank and experience of the professor, and the subject area. The salary also depends on whether the professor is employed by the state or by a private organization. State-employed professors are paid according to a fixed salary scale, while private-employed professors may negotiate their own contracts.

There are many opportunities for college professors in Germany, especially for those who have international experience and qualifications. Germany has a strong reputation for excellence in higher education and research, and attracts many students and scholars from around the world.

There are over 400 higher education institutions in Germany, offering a wide range of courses and programmes. Some of the most renowned universities in Germany include the Ludwig Maximilian University of Munich, the Technical University of Munich, the Humboldt University of Berlin, and the Heidelberg University.

Factors That Affect The Gross and Net Salary in Germany

If you are planning to work in Germany, you might be interested in knowing what factors affect the salary in this country. The salary you can expect to earn depends on various aspects, such as your qualifications, experience, industry, location, and more. Here are five factors that can influence your gross and net salary in Germany:

Your past work experience and degrees

The more relevant work experience and higher education you have, the higher your salary will be. Employers in Germany value professional skills and academic credentials and often pay according to the level of qualification required for the job.

The position and responsibilities

The salary also depends on the type and level of the position you hold and the responsibilities and tasks associated with it. For example, managers, engineers, and IT specialists earn more than administrative staff, service workers, or unskilled laborers.

Industry and sector differences

The salary can vary significantly depending on the industry and sector you work in. Some sectors, such as finance, IT, pharmaceuticals, and automotive, offer higher salaries than others, such as hospitality, education, or social services. The public sector also tends to pay less than the private sector, but offers more job security and benefits.

The size and type of the company

The salary can also be influenced by the size and type of the company you work for. Larger companies, especially multinational corporations, usually pay more than smaller companies, as they have more resources and higher revenues. However, smaller companies may offer more flexibility and opportunities for career advancement. Additionally, some companies may offer bonuses, benefits, or other forms of remuneration, such as a 13th-month salary, company car, or performance-based incentives.

Regional salary gaps or collective tariff groups

The salary can also differ depending on the region or city you work in. Generally, salaries are higher in the western and southern parts of Germany, such as Bavaria, Baden-Württemberg, or Hesse, than in the eastern and northern parts, such as Saxony, Brandenburg, or Mecklenburg-Western Pomerania. This is partly due to the historical division of Germany and the economic development of the regions.

Moreover, some regions or cities have higher living costs than others, affecting the net salary after deductions. Furthermore, some industries or sectors have collective bargaining agreements ( Tarifverträge) that regulate the employees’ minimum wages and working conditions. These agreements can vary by region, sector, or company, affecting salary level and negotiation possibilities.

Random deductions and expenses

The gross salary is subject to various deductions in Germany. The minimum wage is a key factor that influences the gross salary. Deductions include mandatory social security contributions covering health, pension insurance, unemployment, and care insurance. The average monthly cost of these contributions can significantly reduce the net salary.

Additionally, church tax is deducted if you are affiliated with a recognized religious community. Lastly, health insurance is a significant expense, either deducted at source for public health insurance or paid directly to the provider for private insurance.

These are some of the main factors that affect the monthly income in Germany. However, other factors may be specific to your situation, such as the economic situation, the demand and supply of labor, or your personal skills and attributes. Therefore, it is important to research and compare different options before accepting a job offer in Germany. You can use a salary calculator to get an estimate of your net income, or use a web search tool to find more information about the average salaries and payslips in Germany.

High-paying jobs aren’t the only reason why Germany is the best destination for career opportunities. Check our article to know why: Employee Benefits in Germany: What To Expect As An Expat?

Tips for Negotiating a Good Salary in Germany

Young applicant listening to salary proposal of the employer

Here are some tips for negotiating a good salary in Germany, especially if you’re on minimum wage or just entering the workforce:

  1. Research: Look at job listings to understand the median values for salaries in your field and in different federal states. This will give you a benchmark for negotiations.

  2. Consider Living Expenses: Factor in your living expenses when negotiating. The aim is to have a comfortable disposable income after all deductions.

  3. Understand Deductions: Be aware of social contributions and income tax, which will be deducted from your gross salary.

  4. Negotiate Benefits: If a higher salary isn’t possible, negotiate for benefits like additional vacation days or a company car.

  5. Bank Account: Ensure your bank account is set up correctly to receive your salary.

Remember, the minimum wage in Germany is a legal right for full-time employees, so don’t accept less!

What Do Expats Say About Working in Germany?

As an expat with experience working in Germany, I can confidently say that it offers a unique blend of professional advancement and personal enrichment. The work-life balance in Germany is characterized by short working hours, high productivity, and a culture of leisure time. Germans value their well-being and avoid excessive overtime, preferring to complete tasks within regular working hours. They also have strict labour laws and flexible work arrangements that support their work-life balance. This leads to increased productivity and job satisfaction for employees.

The German job market is dynamic, with vacancies in almost every sector. With a shortage of local workers, German companies have been forced to recruit abroad. Competition for international talent is fierce, so many employers offer alluring compensation packages to attract top candidates.

Now, let’s hear from other expats who decided to work in Germany:

  1. Expat from Poland: “I love the stability of life in Germany, of work too. The work-life balance here is excellent, and I appreciate the shorter working hours compared to the global average. The job market is dynamic, and I’ve found remarkable career growth opportunities here.”

  2. Expat from the UK: “Working in Germany has given me access to an inclusive and resilient social safety net that encompasses a broad range of benefits, including complimentary healthcare. If you live and work in Germany long enough, you’ll also access unemployment insurance and childcare subsidies. These comprehensive provisions make Germany an ideal destination if you prioritise security and stability.”

  3. Expat from the USA: “As an expat in Germany, I can expect to interact with individuals from all corners of the world. I’ve enjoyed meaningful conversations and new perspectives that are hard to find in my home country, not to mention forge connections that were once unimaginable.”

Still deciding what job to take in Germany? Read our article:12 Top Most Common Jobs in Germany

Final Thoughts About A Good Salary in Germany

In conclusion, determining what constitutes a good salary in Germany involves considering various factors such as industry, location, qualifications, and personal preferences. While €60,000 is often considered a good salary, the context of your lifestyle, family structure, and career aspirations plays a crucial role.

Understanding the average gross and net salaries in Germany, along with the minimum wage, provides a comprehensive picture of the country’s economic landscape. The progressive tax system, social security contributions, and additional expenses like health insurance and church tax are essential considerations for expats and foreigners planning to work in Germany.

Professions in sectors like medicine, finance, engineering, IT, and academia tend to offer competitive salaries. Negotiating a good salary involves thorough research, consideration of living expenses, and awareness of deductions. Expats working in Germany appreciate the country’s work-life balance, dynamic job market, and comprehensive social safety net.

Whether you are an expat or a local resident, finding the right balance between income, expenses, and quality of life is key. Knowing how to negotiate salaries and understanding the German tax system can help you make choices that fit your personal and professional goals when looking for a job in Germany.

If you’re considering working in Germany or have more questions about salaries, job opportunities, or life in this vibrant country, don’t hesitate to explore our comprehensive guides and resources.

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