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The real salary in Greece in 2022 was reduced by 7.5%
  • 30 Apr 2023
  • economy


High inflation has resulted in a reduction in real wages and an increase in the tax burden in OECD countries in 2022, the Organization for Economic Co-operation and Development finds in its report (Taxing Wages).

The total tax burden on employees in Greece - i.e. the amount of income tax and social security contributions of employees, after benefits are deducted, as a percentage of total labor costs - fell marginally by 0.02 percentage points for single employees without children with an average income and stood at 37.1%, according to an OECD report.

The marginal decline in the burden (tax wedge) resulted mainly from the reduction of employee and employer contributions for supplementary insurance, which overall reduced the burden by 0.21 percentage points. This decrease overshadowed the increase in the income tax burden by 0.18 percentage points, due to the increase in nominal incomes.

For all OECD countries, the average rate for the above category of households remained unchanged at 34.6%. For couples with two children and one worker on average wages, the total burden rose marginally by 0.03 percentage points to 33.7%, while across the OECD it rose on average by 1.05 percentage points to 25.6%.

For married couples with two children, one of whom earns an average wage and the other earns 67% of the average wage, the tax wedge increased by 1.52 percentage points to 35.7%. According to the OECD, the increase is due to the fact that households in this category were not entitled to child benefits due to the increase in the average wage. In OECD countries, the average increase in the tax burden for this category was 0.45 percentage points to 29.4%.

In Greece, the average nominal gross wage in 2022 increased by 1.5% but the average real wage decreased by 7.4% due to inflation of 9.7%.

The report's results, the OECD notes, underscore the importance of policies to moderate the impact of inflation. From data it collected, it appears that in 17 countries automatic adjustment of the personal income tax system was implemented last year, while in 21 countries the adjustment was at their discretion. Most countries proceeded to adjust insurance contributions and half to adjust benefits.


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