Contract labor cost12/5/2023 ![]() Source: Eurostat (earn_nt_taxwedge), (earn_nt_unemtrp) and (earn_nt_lowwtrp) The highest tax wedges on labour costs of low-wage earners in 2022 were recorded in Belgium (46.5 %), Germany (43.7 %), Austria (41.9 %) and Hungary (41.2 %) and the lowest ones in the Netherlands (27.9 %), Ireland and Malta (both 25.5 %) as well as Cyprus (18.1 %).įigure 6: Tax rate indicators on low wage earners - single person without children, 2022 This tax wedge for the EU was 38.6 % (39.6 % for the euro area) in 2022. It is defined as income tax on gross wage earnings plus employee and employer social security contributions, expressed as a percentage of total labour costs. The first indicator, tax wedge on labour costs, measures the burden of tax and social security contributions relative to labour cost. ![]() Figure 6 presents them for a low wage earner who earns two thirds (67 %, to be exact) of the average earnings of a worker in the business economy (NACE Rev. 2, Sections B to N) and who is a single person without children. Tax rate indicators ( tax wedge on labour costs, unemployment trap and low wage trap) aim to monitor work attractiveness. Bulgaria recorded the lowest net earnings for couples with two children (€17 744) or none (€16 824). In the case when both partners of a married couple work (both earning an average worker’s earnings), Luxembourg recorded the highest annual net earnings, both when the couple had two children (€104 771 ) and when the couple had no children (€97 157). The same two EU Member States recorded the lowest (€9 547) and the highest (€63 825) average net earnings, respectively, for a married couple with a single earner and two children (see Figure 5). In 2022, the net earnings of a single person earning 100 % of the average earnings of a worker in the business economy, without children, ranged from €8 412 in Bulgaria to €47 640 in Luxembourg. Information on net earnings complements gross earnings data with respect to disposable earnings, in other words after the deduction of income taxes and employee social security contributions from the gross amounts and the addition of family allowances (cash transfers paid in respect of dependent children), in the case of households with children. Many women work part-time or under atypical contracts: although this permits them to remain in the labour market while managing family responsibilities, it can have a negative impact on their pay, career development, promotion prospects and pensions.Īll the data are based on a widely acknowledged model developed by the OECD, where figures are obtained from national sources (for further details on the model consult the information on the OECD - Benefits and wages website). Gender pay gaps also reflect other inequalities, in particular, women’s often disproportionate share of family responsibilities and associated difficulties of reconciling work with private life. ![]() Some underlying factors that may, at least in part, explain gender pay gaps include sectoral and occupational segregation, education and training, awareness and transparency, as well as direct discrimination. Various issues contribute to these gender pay gaps, such as: differences in labour force participation rates, differences in the occupations and activities that tend to be male- or female-dominated, differences in the extent to which men and women work on a part-time basis, as well as the attitudes of personnel departments within private and public bodies towards career development and unpaid and/or maternity/parental leave. (difference between average gross hourly earnings of male and female employees, as % of male gross earnings) Figure 4: Unadjusted gender pay gap, 2021
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