For decades, the equation seemed simple: study, secure a qualified job, benefit from steady wage growth, buy property, and gradually build wealth that way. That equation has not disappeared, but it works far less well than it once did, especially for working Europeans.
Several forces are converging to make it harder to build wealth through salaried work alone: stagnant productivity, pressure from artificial intelligence, rising taxation of labour driven by ageing populations, unaffordable housing in large metropolitan areas, and inheritances arriving ever later in life. Taken together, these forces are creating a context in which financial investment is no longer a matter of comfort or preference, but is gradually becoming a normal component of economic security.
The European paradox: more jobs, less productivity
There is a common assumption that Europe does not create jobs. That is inaccurate: nearly 30 million additional jobs have been created in the European Union since the start of the century, mostly in services and skilled occupations. The real problem lies elsewhere: this rise in qualifications has not translated into stronger productivity growth.
And it is productivity gains that ultimately make sustained real wage growth possible. On that front, the gap with the United States is striking. As the Draghi report on European competitiveness notes, the gap in GDP per capita between the EU and the United States widened from 17% in 2002 to 30% in 2023, and 72% of that gap is explained by weaker productivity, especially in high-value-added sectors. Over twenty-five years, the structural divergence is clear: roughly 1% annual productivity growth in Europe, versus 1.7% in the United States.
The causes are multiple: a fragmented internal market, significantly lower investment in research and development than that of major US firms, and difficulty in producing and retaining high-growth technology companies. For workers, the result is slower and more uncertain growth in real wages.
Artificial intelligence and the compression of the premium on skilled work
A second constraint is now being added to this structural one: artificial intelligence is beginning to compress the premium traditionally attached to higher-skilled intellectual work.
Its effects are most visible in entry-level positions. Tasks once entrusted to young graduates (document analysis, drafting, financial modelling, legal research) are increasingly being handled by automated tools. This does not mean the end of skilled work. But the path that once led from junior positions to senior roles, along with the corresponding salary progression, is being reshaped. The years during which people accumulated experience and higher pay were also years during which they accumulated savings. If that phase becomes shorter or more fragmented, the overall equation changes.
For young professionals entering the European labour market today, the salary trajectory over the next ten or twenty years is more uncertain than it was for previous generations. That uncertainty is one more reason not to rely on labour income alone.
From fixed pay to equity ownership: a revealing shift
A third trend deserves close attention: the very structure of compensation is changing.
Fixed salary increases for managers and professionals remain modest. In France, median gross pay reached €55,000 in 2025, up by only 1.8%; not enough to offset the inflation of previous years. Only 53% of managers received a pay rise in 2025, seven points fewer than in 2024, according to APEC. Similar patterns can be seen in Germany, the Netherlands and Scandinavia: real wage growth is weak or negative.
By contrast, variable compensation schemes are expanding strongly: profit-sharing, employee savings plans, stock options and restricted stock grants. More than half of French managers now receive a variable component, and more than a third benefit from profit-sharing or similar schemes.
This shift is revealing. Companies are transferring part of economic risk onto employees by making compensation more dependent on performance. But in return, they are also giving them access to capital. In doing so, they implicitly acknowledge something important: over the long term, capital can grow faster than wages. For employees who receive these forms of compensation, the line between labour and investment is beginning to blur. For those who do not, there is one more reason to cross that line on their own.
Taxation of labour under demographic pressure
The social contributions that finance welfare systems already weigh heavily on labour in Europe. In Belgium, the total tax wedge (employer contributions, employee contributions and income tax combined) reaches 52.7% of labour costs, the highest level in the OECD. In Germany it stands at 47.9%, and in Austria at 47.2%. France stands out for having some of the highest employer social contributions in the OECD.
And that pressure is unlikely to ease. Population ageing mechanically increases the financing needs of pensions and healthcare, while reducing the share of the active population that funds them. The OECD estimates that, absent major reform, the tax burden in developed countries could rise by more than six percentage points of GDP by 2060 under the sole effect of ageing. Every additional euro levied on labour is one euro less available for saving and investment.
Whatever the merits of European welfare systems, the arithmetic is clear: the share of labour income that can be converted into savings is under pressure, and the generations entering the labour market today cannot assume that this burden will decline.
On the limits of welfare systems, particularly pensions, see: Retirement, Investment, and Europeans' Trust in the Future
Unaffordable housing, late inheritances
In this context, the two traditional paths through which the middle classes have built wealth have become increasingly difficult to access for a growing share of workers.
First, housing. For a long time, it remained the main route to building capital. But in Europe’s large metropolitan areas (Paris, London, Amsterdam, Munich, Zurich, Stockholm) where qualified jobs are concentrated, prices have surged over the past twenty years. Buying an apartment there now requires a down payment and borrowing capacity that are simply out of reach for many households at the start of their working lives. This is all the more true given how the monetary policies of recent years have tightened borrowing conditions.
On rising property prices, see: Unaffordable housing: why financial assets are becoming essential to building wealth
Second, inheritance. This is the other classic route. But because life expectancy has increased, inheritances are arriving later and later. In Sweden, the median age of heirs is now 55, and the trend is similar across most of Western Europe. Receiving an inheritance at 55 or 60 means receiving it after the most financially decisive moments of life: paying for education, buying property, raising children.
In other words, for a growing share of Europe’s working population, neither housing nor inheritance plays the role of initial wealth formation that it once did for previous generations. This new reality calls for an adapted response.
Financial markets: real returns and economic literacy
In the face of these constraints, financial markets are not merely a fallback option. They have genuine strengths of their own.
The first is long-term return. The MSCI World Index, which tracks major listed companies worldwide, has delivered an annualised return of around 8% over the past thirty years, with dividends reinvested. That figure is an average, and the path is volatile. But it is precisely that volatility that markets reward, and it takes time to benefit fully from it. Time is exactly what those who start investing early have on their side.
The second strength is accessibility. Financial markets do not require a large initial deposit, debt financing or a massive lock-up of capital. A salaried worker can begin investing gradually, diversify across global markets, and retain a degree of liquidity and flexibility that property cannot offer.
But there is a third advantage, mentioned less often: investing in financial markets means taking an interest in the world economy. It means understanding why a company advances or declines, following major monetary balances, and grasping the meaning of business cycles and central bank decisions. A population of active and informed investors is a population better equipped to understand the issues of its time and to take part in them as conscious actors rather than helpless spectators. It is a form of economic culture that financial markets, when approached seriously and methodically, help to spread.
Europe, moreover, is not without advantages in this respect. It has a well-educated population, solid financial infrastructure, regulated markets, legal frameworks that protect investors, and simple, low-cost savings products — foremost among them diversified ETFs, available in most countries. Initiatives such as the Capital Markets Union, if they are completed, could make this environment even more favourable for retail investors. Private equity, bond markets, sustainable investing: the range of possibilities is expanding.
Tukhe: a tool for taking control of your wealth
If financial investment is gradually becoming a central component of economic security for European households, then the quality of the tools used to monitor it matters.
Many platforms remain inadequate: too simplistic, too commercial, or incapable of consolidating multiple accounts and brokers into a coherent view. Others capture and exploit personal financial data without the user being fully aware of it.
Tukhe is built in a different spirit. Our conviction is that financial wealth should be analysable with rigour, consolidated across multiple accounts and brokers, and managed according to one’s own criteria — without data being handed over to platforms whose business model depends on exploiting it. For those beginning to build wealth beyond salaried work and real estate alone, clarity and discipline in monitoring investments are not refinements. They are fundamentals.
To learn more about the new possibilities offered by Tukhe, see: Tukhe: what portfolio tracking should be
