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 benefits.
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 for insurance contributions 11.3%) approximately as much as the corresponding employee in the OECD countries (24.9%). In other words, his net salary was about three-quarters of his gross salary.
Taxation of couples
For one couple with two children where only one spouse works with an average salarythe tax wedge was slightly smaller, at 37.1%, relative to the worker without children, an increase of 0.73 percentage points from 2022. In OECD countries, the average burden for a similar couple was much lower, at 25.7%.
For one couple with two childrenwhere one spouse is paid the average wage and the other 67% of the average wagey, the tax wedge corresponded at 37.5% compared to 29.5% in the OECD, an increase of 0.59 of a percentage point compared to 2022.
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