Many European executives, used to high labor costs and the reputation that their labor markets are the most expensive ones in the world, are often surprised that the requested salary levels for U.S. employees are seemingly even higher than what they are used to seeing at home.
Besides creating unexpected problems for their local HR budgets in the U.S., it also creates the unpleasant situation of seemingly having to pay higher salaries at their subsidiaries than at headquarters. This is something that challenges the fundamental understanding of the ‘natural pecking order’ and stirs up some deep emotions with many managers at the ‘Mutterhaus’ (home office).
However, when accounting for indirect labor costs (payroll taxes, cost of additional free days for vacation and holidays, etc.), even with their higher take-home salary levels the employees of the U.S. subsidiary are still often less expensive for the company than their European counterparts. Click here to read the full article.
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