Mercer examined the average salaries of senior managers in 24 European countries, and calculated their purchasing power based on tax and social security deductions and the local cost of living.

Its research showed that senior managers in Switzerland score highest in terms of purchasing power and can buy over three times more with their salaries than those in the lowest scoring countries.

Managers in Germany and Austria have the second and third highest purchasing power respectively. Other top-scoring countries include Ireland, Spain, France, the Netherlands and UK.

At the other extreme, senior managers in Latvia, where salaries are relatively low, are the worst off financially. Managers in Hungary and Estonia are only slightly better off.

“While senior managers in some European countries earn large salaries, their purchasing power can be significantly reduced by high tax and living costs,” said Mark Sullivan, Head of International Consulting at Mercer.

On average, senior managers in Switzerland and Germany earn EUR133,000 and EUR108,000 respectively and have the highest purchasing power. Meanwhile, managers in Spain and France can buy more with their salaries (EUR80,000) than their higher paid counterparts in the UK and Belgium (EUR85,000 and EUR91,000) who pay higher taxes.

“Within the single European market we continue to see significant differences in pay, tax and social security levels,” commented Mr Sullivan. “As competition for talented employees intensifies, people with transferable skills may be more attracted to countries with good, affordable living standards than places where gross pay is higher.”

The study also found that salary and purchasing power do not necessarily correlate outside Europe. For example, Australian and Japanese managers have equal purchasing power even though those in Japan earn almost EUR7,000 more a year on average.

Mr Sullivan said: “Japan’s notoriously high property prices and living costs have driven down workers’ purchasing power.”

The survey also revealed that purchasing power for senior managers in Hong Kong, Australia, Japan and the USA is higher than the European average.