Average salary and ease of doing business

One of the main parameters of an economy is the average net salary and I have been following that on my blog for some months now. Here is my short post about the last comparison: http://www.pilveraal.ee/2018/06/euroopa-keskmise-palga-areng-2018.html

As I work in a data and IT company Solita and am surrounded by data scientists, engineers and developers, then I cannot only settle with following the stats but want to find the reasons for some economies doing better than the others.

As a first step, let's see if the countries Ease of doing business ranking is related to the average net salary or can predict the change of the salary. If there is a correlation then it gives a clear message that working with the things that are measured by the Ease of doing business index makes people richer. No political discussion needed just copy what countries on the top of the list are doing and you get rich. :-)

 Underneath you will find the graphs for the EEA/EU countries on that, but I will jump straight to the conclusions.
In West-European countries the net salaries and the ease of doing business are related with some exeptions:
- Switzerland and Luxembourg are the richest countries in Europe, but are only 33 and 63 on the ease of doing business ranking. Probably the financial industry and beautiful nature for tourists explain that.
- Portugal seems to have some other economic problems and salaries there are much lower than their ease of doing business suggest.
- the salaries in UK are lower than their high ease of doing business ranking (7th in the world) suggest. This is partly due to the pound/euro exchange rate that has fallen about 10% after Brexit vote. Most probably the soon to be due Brexit will lower UK's ranking on the ease of doing business and then it will be all in correlation.
- Norway (and Denmark) have oil and gas (and wind and biofuels).

In East-Europe the picture is different and there seems to be a far greater correlation between having rich neighbours and high salaries than between ease of doing business and high salaries. However, on regional basis there is a relation. For example if you group countries like:
- Czechia, Slovakia and Hungary
- Slovenia, Croatia
- Romania and Bulgaria
or maybe even the Baltic countries you can see that ease of doing business does convert into higher salaries.

So here is the current map (17.08.2018) with average net salaries in Europe:



In the bottom of this post you will find a table with the EEA countries, their ease of doing business ranking and average net salaries. However, for analysis purposes it is clear from the data and visible on the map above that it does not make sense to put all the countries in the same pot=on the same graph, so I did some grouping - an operation that would not be allowed in real-sciences, but could be OK in social sciences like economy and history. I grouped the countries to West and East. I also thought if it would make sense to make a separate graph for Switzerland and Luxembourg, but decided to leave them on the Western-Europe graph. So here they are:






Economy Ease of Doing Business Rank Average net salary (euros)
Denmark 3 3270
UK 7 2018
Norway 8 3395
Sweden 10 2510
Estonia 12 1053
Finland 13 2509
Lithuania 16 700
Ireland 17 2505
Latvia 19 733
Germany 20 2302
Austria 22 2324
Poland 27 803
Spain 28 1749
Portugal 29 925
Czechia 30 930
France 31 2225
Netherlands 32 2152
Switzerland 33 4502
Slovenia 37 1083
Slovak Rep. 39 862
Romania 45 589
Italy 46 1758
Hungary 48 701
Bulgaria 50 451
Croatia 51 858
Belgium 52 1920
Cyprus 53 1658
Luxembourg 63 4887
Greece 67 890
Malta 84 1021

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