OECD: Italian wages stifled by tax wedge
Italy is 17th in labour costs but only 23rd in employee incomes and last in the 'yield' of pay rises in the pay packet
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Key points
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High labour costs but employee income significantly penalised by the tax wedge. The 2025 OECD report on the taxation of wages in 2024 confirms the chronic problem of wages in Italy, which lose six positions between the ranking of labour costs (17th place, with an average of $78,312 per capita, followed by the USA, Korea, Spain and Japan, OECD average of $71,277) and that of net employee remuneration, where the Italian worker plummets to 23rd place among the 38 countries analysed - with a net wage of $41,438, against the OECD average of $45,123.
The country with the highest labour costs - the reference is to full-time employees - is Austria with just under 111 thousand dollars per capita, ahead of Switzerland and Belgium with 110 thousand, Germany with 107 thousand and Luxembourg with 101 thousand. France stands at 91,800 dollars, the United Kingdom at 85,500, Spain at 72,400 and Japan at 66 thousand.
Another parameter marks the difficulties of Italian growth, where the increase of 1 currency unit (e.g. 1 euro) in gross labour costs in the case of a single worker with an average wage only translates into 0.68 units of increase in net income. This is not only below the average, which is 0.86, but also the lowest value among OECD countries.
Penalised single workers
.Italy leads the league table in the increase of the wedge for single workers (1.61 %) followed by Slovenia (1.44 percentage points), while the gap decreased in Finland (-1.57 percentage points), the United Kingdom (-1.74 percentage points) and Portugal (-1.75 %). The decreases in Finland and the United Kingdom were due to a reduction in social security contributions, while in Portugal the determining factor was a revision of the tax system that reduced rates in the top six brackets.
The wedge also goes up for families with children
The average OECD tax wedge for a single-income couple with two children at average wage levels increased by 0.16 percentage points to 25.8 per cent in 2024, the largest increase among family types, but decreased in 20 countries. The difference between the average OECD tax wedge for this family type and that of the average-wage single earner fell by 0.11 percentage points to 9.2 percentage points in 2024, indicating a slight weakening of the tax advantage for families with children.
