Real wages in Greece increased in 2023, but at the same time their tax burden increased more as the tax scales were not adjusted for inflation, resulting in a decrease in the disposable income of workers, according to the OECD’s annual report (Taxing Wages 2024). .
Specifically, gross pay for a childless worker paid the median wage rose 6.2% last year, while the actual salary of after inflation 4.3% increased by 1.8%. But at the same time, his burden increased by 2.5% due to an increase in taxation.
Increase in the tax wedge for the second year
The total tax burden (tax wedge) of the employee without children with an average salary increased in 2023 to 38.5% of labor costs – i.e. the gross salary plus employer contributions – from 38% in 2022 and against 34.8% on average in the 38 OECD countries. The tax burden or tax wedge includes income tax and employee and employer contributions less tax exemptions or allowances.
The tax wedge increased for the second yearafter 2021 when it had decreased to 37.4% from 40.4% in 2019. To the greatest extent it results from employer contributions (15.2% of total labor costs), followed by employee insurance contributions with 11.3 % and the income tax with 8.9%.
This employee paid 24.8% of his gross salary for income tax (10.9%) and social security contributions (11.3%). In other words, his net salary was about three-quarters of his gross salary.
Taxation of couples
For a couple with two children, where only one spouse works for an average wage, the tax wedge was slightly smaller, at 37.1%, than for the worker without children, an increase of 0.73 percentage points from 2022 .In OECD countries, the average burden for a corresponding couple was much lower, at 25.7%.
For a couple with two children, where one spouse is paid at the median wage and the other at 67% of the median wage, the tax wedge was 37.5% versus 29.5% in the OECD, an increase of 0.59 of the percentage point compared to 2022.
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