Monday, August 8, 2011

What's a fair salary in Amsterdam?

People constantly ask me about what a fair salary is in Amsterdam, but if I give a number, it's going to misleading. I've tried to explain the foreign cost of living before, but this is an update specifically aimed at nailing down a couple of points I should have covered better.

Here's what generally happens to the inexperienced expat:

1. They calculate the exchange rate and either drool or cry at the expected salary.
2. They might consult a cost-of-living calculator.

First, you have to remember that the exchange rate only matters when you're exchanging money. Got that? If you're on holiday from Thailand to France, converting Thai bhat to Euros is important. If you're moving from Thailand to France, it's not as important any more unless you regularly send money back and forth or are using this to build a nest egg and return home. Then the exchange rate is important. If you're not exchanging, forget it!

Second, the cost of living calculators are very dicey. Not only are they often out of date or rely on questionable assumptions, they may simply not apply to you. Again, consult my cost of living overseas post to get an idea of why they are dicey. Just one or two differences in your lifestyle can have a huge financial impact.

London, England
London is expensive.
Photo by TJ Morrison
What does this mean? Well, if you compare the cost of living between Boise, Idaho and London, UK, you see that London is twice as expensive as Boise. By Boise standards, London looks unaffordable. Except that London has roughly 32 times the population of Boise and obviously they can afford to live in one of the most expensive cities in the world. Even the fast food clerks can afford to live there. Do they have the same standard of living as in Boise? No way, but it's not that it's worse. It's different. It may not be for you. Who knows?

Boise and Foothills
Boise is not expensive
Photo by Boise Metro Chamber
You want to know how much you get paid here in the Netherlands? You can check out payscale.com and that might give you some insight,  but you also have to remember that as a foreign knowledge worker, there's a good chance you'll get the 30% ruling which will mean that for an equal salary, you'll still earn more than a native Dutch worker.

More importantly, these are salaries that Dutch people live on and the Dutch are quite happy. If you do a naïve exchange rate calculation, it's useless unless your plans to move to Europe all involve "making a fortune". However, if your plans to move to Europe are for "better quality of life" and a comfortable living, then you'll be better prepared to accept that things here will be different, including salaries. How does five weeks holiday and dirt-cheap medical insurance translate? You'll have to decide that for yourself, but if you're coming over, you're probably doing it for reasons other than to strike a fortune.

So what do you? Study their market and learn what the locals make. Once you do that, you can know what a "fair" salary is and leave behind your expectations of what you think you should be earning.
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