As someone who works in an Eastern European country, i also did a writeup on how much i've made over the years and how that figure has changed, while working for a local company: https://blog.kronis.dev/articles/on-finances-and-savings
In short, this year i'll probably make around 18k Euros, in total.
I guess that just goes to show how different the situation is depending on where you live and where you're employed.
You are grossly underpaid, even for eastern europe. Guys just across the border (or two) from you make 2x+ more, while paying next to nothing in taxes (5% I've heard, as faux contractors) and enjoying some of lowest CoL in europe - https://jobs.dou.ua/salaries/dynamics/
> So one option is to move to one of the outsourcing companies or even better to a smaller company dealing with western clients.
That's pretty much what most (if not almost all) of ukrainian tech is doing. And coupled with low CoL and widely abused tax loopholes, they are making bank, netting comparable money to 6 figure jobs in the west. So I'm just saying that eastern europe == poorly paid is a misconception.
Yep, that could definitely be: especially since i started work as a student, before getting either my Bachelor's or Master's. I guess i can only say that the wisdom of needing to job hop every X years is certainly based in reality, at least when it comes to the majority of companies and earning potential.
Why are these numbers so massively different across the world?
Do European companies generate that much less revenue? Or are labor unions in Europe just that much less effective at bargaining? Or is productivity that much lower in Europe? (I'm not sold on any of these)
My point is: it seems to me that it is possible that labor unions in Europe are less effective at bargaining than individuals in the US, but I'd like to see research. I didn't intend to imply the US software industry is unionized; the US barely has any union jobs in 2021.
In EU, traditionally, business people are paid much more than technical personnel. Prominent engineers are valued, but only to some extent. For example, mechanical engineer salaries in top German corporations are not that high, and they are bringing in a lot of value.
Let's not forget most FAANG founders were computer scientists, plus there's a shortage top talent. Electrical engineer salaries at Intel, AMD or ARM are, as far as I know, nothing to call home about.
With that said, we are starting to see some IT positions with really nice compensations. Mostly in CH, NL, DK and UK as far as I can tell.
There are estimated to be 4.4 million software developers employed in the U.S.[1] and about 150 million total jobs[2], so about 3% of employed persons in the U.S. are software developers.
About 11% of U.S. workers are union members[3], so there are more than 3 times as many union members as professional developers in the U.S.
Mostly public sector (around 1/3 unionized). Private is around 6%[1]. And after the public sector it's transport, utilities, telecoms, construction, manufacturing. Basically a laundry list of underperformance in the US -- important sectors (govt especially) choked to death by rent-seeking and complacency.
there are, to my knowledge, no labor unions for software developers in Europe. Some people have union contracts through industries that are fully unionized and happen to need software developers, but that doesn't translate to really high salaries that you see in IT.
What country? Serbia's GDP per capita is about 1/10 of the United States. Software developers make less money there because everyone makes less money there.
Man, some Eastern Europeans offered to write an app for me for $2000, and I assumed it was a scam since it'd be 50+ hours of work. Maybe I should hit those guys up again, if someone posting to HackerNews is making less as a programmer there than you'd make flipping burgers in California
I'm a refugee from Nicaragua living in Mexico. I have legal status (thank god) but my paperwork is still a mess. So I freelance on Upwork.
I'm surviving, but I make way less than a kid flipping burgers in the US. But the good news is I'm alive and well and happy :) And it will get worked out in time.
I'm super happy with my life and it keeps getting better but when I hear first worlders, or even affluent third worlders, talk about money it sounds so crazy :3 Hearing someone say 100k a year is 'enough for a family', when working families where I am now get by decently on 300 MXN a day lol.
Perspective is everything. Just gotta keep working hard! If you ever need a freelancer who's even cheaper than Eastern Europeans I'm here for you <3
Unions make sure everyone gets paid fairly equally. That doesn't work in a top heavy profession like software engineering where the top are 5x better and paid 5x more than the bottom.
I would add two reasons in addition to those already discussed:
1) Some of the difference is structural. Upper middle class gets a larger share of the wealth in the US than in most European countries. An American professional in any field is paid more relative to the median income than in Europe.
2) International comparisons are often misleading. This is true even if you adjust the numbers for purchasing power and structural differences (such as benefits/taxes paid on top of the nominal salary). For middle class and above, the marginal cost of employment is higher in the US than in Europe, because you are expected to contribute more towards healthcare / education / childcare / retirement / unemployment / parental leave / etc from your personal income. An American employer has to pay a larger fraction of those costs directly to their employees, while an European employer can rely more on other taxpayers.
The second point sets American middle class salaries higher relative to GDP per capita than in Europe, while the first point sets upper middle class salaries higher relative to middle class salaries.
In a truly open market, tech salaries would converge globally, but there are currently far too many legal and cultural obstacles for that.
The addressable customer market is one big difference. American companies sell to the world. Eastern EU companies are largely stuck with eastern Europe or EU at large.
The other difference is that smaller addressable market also means fewer problems to solve and thus fewer companies.
As an example, engineers in China, India and Indonesia are making way more that $18k these days because there are many problems to solve, many more companies competing for the same engineers.
VCs and senior executives are largely hesitant to randomly go hire from any random country, eastern European or not. Unless there is an established city, like say, Bucharest. Most managers don't want to deal with 1 person in each random city. Having an official office in a big EU city is no brainer. It is being done as well.
Unrelated: A friend of mine had a well established Vodka factory in Crimea/Ukraine randomly taken over by some goons.
Sometimes people worry, for good reason or not.
Some can. But hiring people in another country adds another layer or two of indirection.
Anecdotally, software companies that pay the best tend to go the opposite direction: they hire people that are good at self directing and self motivating, which can remove entire layers of indirection.
In some cases, they can. A friend of mine is a project manager for CC Bill, a payment processor for porn sites. They hire almost exclusively from eastern Europe for software development. But if you want to do business with the US government or financial or healthcare industries, i.e. where most of the money is if you're not an ad tech giant, you're largely restricted to hiring US persons. That doesn't mean they need to be citizens, but they need to live in the US, and live here legally, which largely means they can command US wages.
American companies can but the pool is not large enough to open offices there. And if they are opening international offices, it's likely going to be in Asia where there is more money to be made.
If you are in EU, the offices are likely going to be in western Europe or Switzerland or UK - larger addressable markets.
Looking at New Zealand, there are a few drivers to lower pay:
1. A business will pay the least they can to hire someone, so salary really depends on the excess availability of potential employees - if there is an excess of developers then wages remain low. The business owners sensibly wish to keep the excess profits (why share?).
2. Businesses have a figure for what a standard developer is worth, and that figure is disconnected from the value of that person to the business. I have repeatedly seen businesses lose extremely profitable employees because the business decision makers wouldn’t pay someone enough more than a “normal” salary for their position.
3. There are a lot of NZ software businesses that are simply not that profitable and they don’t generate the excess profits necessary to pay high wages. Not that many companies earn enough to pay SV wages.
4. I suspect that a lot of super-talented people move to SV, and the wages there are skewed by the excess talent (excess talent is not so common elsewhere?). I have personally seen some extremely talented developers leave my town for overseas for higher wages, because the talented have the best opportunity to do so.
If you're a European developer and underpaid, are you going to start your own company to do the same work but sell it yourself and take all the margin?
Probably not, from comments I've seen here, it takes an awful lot of work to make a legal business. In the US, it takes minutes to incorporate, and even less time if you don't care to incorporate and just want to file a Doing Business As to use a separate name. Business banking doesn't take a lot to get going either. If you live in California, your employer probably can't stop you from quitting to start a competitor (as long as you don't take IP with you)
> If you're a European developer and underpaid, are you going to start your own company to do the same work but sell it yourself and take all the margin?
It depends on the country and the government there, i'd say, as well as how technologically advanced they are. Here in Latvia, it's actually not too hard - you just need to fill out a couple of forms, take care of the starting capital and payments and then you'll be registered as a company. In addition, there are various types of companies, to support small startups as well: https://www.ur.gov.lv/en/register/
That said, i believe that taxes and such are a tad overcomplicated in most countries, though there probably are a few good arguments against making most of the bureaucracy a bunch of online forms with prepopulated data, with which i may or may not agree.
Of course, for many, other aspects of actually running a company are what cause difficulty - everything from doing sales to marketing, as opposed to just writing code and architecting technical solutions.
> are you going to start your own company to do the same work but sell it yourself and take all the margin?
No, but not because it's supposedly difficult to incorporate; I did this once and it only took filling a one page form, waiting 10 minutes in queue and paying 20€ with a bank card.
It's because instead of programming then time would be frittered away with customer acquisition and asshole management.
It's all of that. European tech companies are smaller than US tech companies, have lower gross revenue per employee, make less profit per employee. Taxes are higher in Europe, which disincentivizes risk taking and ambitious individuals. Labor productivity is also lower in Europe. Finally, Europe still has a culture where software engineers, cloud architects/products/managers/etc. are viewed as code monkeys and the people who really matter in a corporation are the finance people and upper level executives.
Europe also suffers from a brain drain to the US (and Canada to a smaller proportion). Many of Europe's best and brightest software engineers have already emigrated to the US, leaving behind the less productive ones.
> Europe also suffers from a brain drain to the US (and Canada to a smaller proportion). Many of Europe's best and brightest software engineers have already emigrated to the US, leaving behind the less productive ones.
You need to back this up with something better than anecdotal evidence - FWIW I've worked with plenty of world class American engineers who don't live in the US
You need only look at the makeup of every MBA, MEng, MS, and STEM PhD program. 50% European and 50% Asian, all foreigners (i.e. immigrated on a student visa). If there was no brain drain then you'd expect mostly US permanent residents/citizens.
Brain drain doesn’t mean that all top talent is gone, but rather that there is less of it than there would have been otherwise.
That this is happening between Europe and US is beyond clear: European engineers often emigrate to US, but American engineers emigrate much more rarely to Europe.
You know, i feel like this is probably a bit misleading, at least because of how we measure productivity:
> Labor productivity measures the hourly output of a country's economy. Specifically, it charts the amount of real gross domestic product (GDP) produced by an hour of labor.
Whereas i'd like to see something along the lines of:
> The ratio of hours needed to develop features X, Y and Z, as median values based on the output of all the companies within the industry in said country, categorized by tech stacks, the education/experience of employees etc.
That'd let you have a controlled environment (same features, categorized by stack), as well as get insights based on how the different groups (students, younger developers, more experienced developers) compare in different countries, possibly as a proxy for the quality of education and how much companies invest in skill development.
If we don't do that, our productivity simply describes a hourly measure of GDP, which feels wrong, at least as far as semantics and the language aspects are concerned.
Of course, the above suggestion also isn't realistic, because there have been attempts to formalize estimation (for example, COCOMO 2), but even those didn't work out.
> Europe also suffers from a brain drain to the US (and Canada to a smaller proportion). Many of Europe's best and brightest software engineers have already emigrated to the US, leaving behind the less productive ones.
Of course not, it is just mind numbing regulation coupled with systematic risk aversion. Many SV startups would never have gained traction starting over from Europe, neither financially nor for large-scale deployment authorisation.
> it is just mind numbing regulation coupled with systematic risk aversion.
It's also exceptionally difficult and time consuming to rapidly scale through the EU with its many local economies/languages/cultures, versus the giant and quasi homogenous US market. And you get Canada pretty much as a freebie with the US market. That's $24.x trillion in economy in just two markets (nearly 50% larger than the EU). By the time you slog your way through a bunch of the EU markets, you'll find that a US venture capital funded competitor is already several times larger and turning its attention to your home market/s (putting you on the defensive, while they've locked up the lucrative US market and can pummel you endlessly with the financial resevoir that comes with that).
If you're in a smaller nation in the EU, the ideal is to go right after the US market first as a springboard (assuming the product/service is globally useful and will benefit from grabbing the US market). That's especially true if you're early and have an opportunity to lead the US market.
Yes, thank you very much, that’s the most sensible tip from a business / commercial perspective I also share locally when asked for advice: plan for the anglosphere natively. Not that there are no success stories from Europe as well, they are just much rarer and too much too often much smaller and deeply fatigued by years spent fighting fragmentation.
It must be said that large scale, extreme/first-of-a-kind tests are simply not possible over here: not in the energy sector, not with autonomous AI deployment, not using any sort of active biochemicals/pharma, not as hostile moves in the fintech or the information sectors. This simply makes innovation much slower and pretty bureaucratic, but we cannot say there is no innovation at all, it generally being funded in the end under one of the numerous EU grants.
Aside from games, European companies founded by tech entrepreneurs are extremely rare, and are only really appearing in the last decade.
Most of Europe's engineers work in large corporations that were created ages ago, and subsisted on government procurement of infrastructure, defence, or as subcontractors/staffing agencies to industry. And government spending in Europe has also been much tighter than USA.
Most "new" media/tech companies are founded as "spin-offs" from older media companies/publishers/telcos/banks. The engineering in Europe's early web efforts was considered as important as copy-machine technicians. This is changing, but the attitude is still deeply ingrained: people are either decision makers or "technicians".
Much longer history, higher fragmentation and the constant need to avoid wars after the fall of the Roman empire made humanities/politics/commerce prevail dramatically upon science/tech/innovation. Edit: you can see a living example of this at work again with the increasing feud between the EU and the UK after the Brexit (even before that but, you know, it was aptly defused from within).
> Taxes are higher in Europe, which disincentivizes risk taking and ambitious individuals.
The implication is unproven.
Furthermore, most FAANGs dodge most taxes and have offices everywhere including in Europe, making your point moot.
> Labor productivity is also lower in Europe.
That has to do with US geopolitical influence. (and army).
> Finally, Europe still has a culture where software engineers, cloud architects/products/managers/etc. are viewed as code monkeys and the people who really matter in a corporation are the finance people and upper level executives.
That depends on the company. Again, there are european companies in US and US companies in EU... and yet the salaries are in no way aligned.
> Europe also suffers from a brain drain to the US (and Canada to a smaller proportion). Many of Europe's best and brightest software engineers have already emigrated to the US, leaving behind the less productive ones.
Analysis on most technical or important FOSS projects prove otherwise, with EU having the brightest.
>So based on these tests, which country has the programmers that score the highest?
>In order to find out, we looked at each country’s average score across all domains
So it's taking the average of the country, not really looking at the best individual programmers. Considering the US had more entrants than China(which has 3x the population of the US), my guess is that there are many more mediocre devs from the US participating, which brings the average down.
> Taxes are higher in Europe, which disincentivizes risk taking and ambitious individuals.
This seems backwards to me. A society with higher taxes typically has better social safety nets, better infrastructure, less corruption, etc. Higher-tax societies incentivize risk-taking, not the other way around, especially for "ambitious individuals". When there is more structure and support around, more people are able to take a leap.
Safety nets provided by European countries are intended mainly for not ending homeless.
If you are running business, your loses are opportunity costs. Eg. you have already 100k EUR yearly salary and you decide to try running startup. If it fails after 5 years, so you didn't get any money from it (eg. you had to paid debts at the end), you probably lost 500k EUR in opportunity cost.
Progressive taxes incentivize risk taking in lower and lower-middle class, because you are protected from "total failure", but disincentivize risk taking for upper-middle and upper class, because expected rate of return is lower.
At the end of the day, there is no single "right way" to run a state. You have to make tradeoffs, decide what you value more and what you value less.
Only for lower income earners. A great health plan is $1k-1.5k/mo, which is crushing if your savings or excess capital are in the 5 digits or less.
If you’re financially independent or wealthy enough to be (independently) doing a startup or taking on a business venture, it’s a rounding error in the books.
You can raise capital so easily with any traction (seriously, if you have any credible paying customers at all YC will take you and that unlocks funding from everyone else). The cost of health insurance is negligible compared to the astronomical salaries of software developers.
It seems to me that risk taking is probably deeply cultural, and is also likely effected by both policy and economic status (collective and individual status). It's probably hard to know how to quantify all of these different effects, but I hope some people are trying to research this!
Culture is not that hard to change when there is money involved. The difference in SV is that there is so much venture capital willing to create new companies. Given that amount of capital, there will always be someone willing to do it.
Doesn't it seem a bit old fashioned that venture capital should be geographically localized, as if it were a physical pile of gold? Is that not on its way out?
There’s probably a big difference in the kind of risk taken. The safety net might lead to starting a coffee roastery vs a VC-backed tech company that will create a thousand jobs and massive advertising revenue.
If things are working so well in Europe, why hasn't most of Europe seen any economic growth in two or three decades? That sure sounds like it's severely broken to me.
The GDP of Germany and France are both below where they were in 1995 inflation adjusted (and that was true even before Covid hit). Britain's economy is where it was in 1998. Italy is far below where it was 30 years ago ($2.1t today; $1.32t in 1992, which is $2.58t inflation adjusted). Spain is where it was in 1992. Russia's economy hasn't expanded in 13 years; the Netherlands is in the same boat as Russia, no expansion since 2007-2008. Belgium's economy hasn't moved since 1995. Sweden's economy has grown by about 10% in nearly 30 years (not per year, total; $284b in 1992, which is $564b inflation adjusted; their present GDP is $625b). Austria has similarly seen economic stagnation for nearly a generation. Finland was at $141b in 1990 ($303b adjusted), they're at $300b now. And so on.
If Europe weren't disastrously broken, they wouldn't be suffering such intense and widespread economic stagnation. How long can that stagnation continue before something very bad happens (eg the social safety nets start to melt, as costs climb with demographic aging and there's no economic growth to offset it; growth doesn't get easier as the worker demographics erode)?
While Europe has been asleep for 30 years, China went and became a superpower with an economy larger than the whole of the EU, starting from $426b circa 1992.
> The GDP of Germany and France are both below where they were in 1995 inflation adjusted
In US dollars. You can't use USD inflation numbers for other countries, Euro inflated much less than US dollars in these years. The effect you see where Europe has stagnated given USD levels of inflation is just the effect of USD currently being a bubble. If you use their internal inflation numbers then the economies of Europe are growing just fine.
USD is supposed to be a bubble, because that's how it was designed (at least after Breton Woods). I realized this when trying to figure out when the GDP of China would be higher than the US, and seeing that this depends less on real Chinese production and more on the crazy valuation of USD.
A lot of US economy is not real. A lot of the GDP is based on financial services, real estate, and stocks (including tech), which are pure bubble money. A lot of the economy is also based on health care, which basically doesn't exist is a decent country with public services. The other part is "defense", which means they threat the rest of the world into growing their economy.
In fairness, China has twice the population of the entirety of Europe put together. It's easy to expand an economy from a small base, less so when you're already starting from a decent level.
Interesting stats nonetheless, I wasn't aware that Europe had stagnated so much. Your stats seem a little off; Most of the stagnation seems to have occurred from the GFC onwards, rather than before (using GDP per capita numbers)
What you said may be true for an individual, but not necessarily a small company. Because of socialist regulations and taxes a small company may have higher startup costs and it may be difficult to lay off employees, which makes hiring someone more risky, along with expanding the business.
You're probably being underpaid even for Latvia. The first thing you should change in your analysis is that you should compare your salary to other software developers, not the general national average for all people. I would hope that the Central Statistic Bureau of Latvia provides this data, but you'd have to search for it yourself.
I'm from Estonia (immediate neighbor of Latvia with a similar history) and the statistics here [1] paint a healthier picture. The median software developer salary in Estonia for Q2 2021 was 3300€/month (39600€/year), with the average being even higher (3460€/41520€). These are national level statistics, so the numbers are even higher if you work for one of the local unicorns or Microsoft.
You should probably start demanding more money. Not US levels of compensation, but at least figure out the local Latvian median for software developers and aim for that to start with.
Salaries in Lithuania are about the same as Estonia, however I've heard of contractors getting nearly €10k/mo (before tax). Even working as a shop assistant you can get up to €1500/mo, so yes I would say OP is very much underpaid.
> i probably should mention that these are the net salaries
Definitely, I know in many parts of EU it's common to discuss net (specially when talking about monthly salaries) but in an English article targeted at the international community you'd be way better off sharing the gross, which is the expected way.
I actually used Upwork before finding the current company, which provided stable income while i was in University.
Upwork itself oftentimes feels like a race to the bottom, but i had some interesting projects as well: everything from web development (though WordPress stuff can be frustrating), to things like stock visualization, programming for video games, some physics simulations etc.
Those were all far more interesting than the CRUDs that the company developed, though thankfully i also picked up things like CI/CD, unit testing, integration testing and test automation in general, as well as many other things related both to development and DevOps.
As far as finances go, working for an European company abroad would probably be the wise thing to do, or looking for a local company that pays better, as many suggest most developers should do every X years.
In short, this year i'll probably make around 18k Euros, in total.
I guess that just goes to show how different the situation is depending on where you live and where you're employed.