Post-tax incomes fell in real terms in more than half of OECD countries, according to the organisation’s latest study, published on Thursday 25 April. Between 2022 and 2023, average wages rose in 37 OECD member countries in nominal terms, but declined in real terms in 18 of the 38 member countries.
The fall in the real wage was greater than 2% in seven countries, including four EU countries: Estonia, the Czech Republic and Hungary, as well as Sweden, with falls of 2.2, 3 and 4.6% respectively.
Within married couples, second earners, 75% of whom are women in virtually all OECD countries, face higher effective tax rates than single workers when taking up employment at the same wage level in the majority of OECD countries, although the gap has narrowed in recent years.
In a majority of countries, the increase in labour taxation was primarily driven by increases in personal income tax. Despite the fall in real wages, nominal wages rose in 37 of the 38 countries, as inflation remained above historic levels.
In the absence of automatic indexation of tax systems in many OECD countries, high inflation tends to increase workers’ tax liabilities by pushing them into higher tax brackets. It also erodes the value of the tax relief and cash benefits they receive.
To read the study: https://aeur.eu/f/bz0 (Original version in French by Anne Damiani)