The term “wage” and its size are very important in national discussions about labor markets, taxes, and insurance payments, but also as a part of international comparisons for investors deciding to build a factory or place investments in a specific country.
A lot of confusion has been created by the introduction of gross wage, with arbitrary distinction between “employee paid” and “employer paid” taxes and contributions. However, this is balanced out by introduction of total wage cost in international statistics.
Yet, total wage cost does not provide complete picture about labor cost at all. It does not count paid holiday, sick leave, it does not count employee related costs like obligatory meal vouchers, other benefits and similar phenomena. Importantly, it does not count various surcharges required by national law (for nighttime work, holiday work, etc.).
Four think tanks – INESS (Slovakia), IME (Bulgaria), FOR (Poland) and Liberal Institute (Czechia) with the generous support of the Friedrich Naumann Foundation for Freedom collaborated and created national calculators entitled Employee Price.
Using the methodology created in 2019 by INESS, these four national calculators take numerous inputs from a user (wage, overtime, nighttime hours, etc.), calculates all monetary costs and discounts time spent out for work (holiday, state holiday, sick leave, etc.) and returns the price of the employee – the total cost of man-hour and man-month of work.
In the charts you can see the result comparison of the four countries for two model employees:
|Model employee #1: „white collar“
gross contractual wage 1200 €, no overtimes, no weekends, etc., 30 years old, no kids, company with 100 employees
|Gross wage||1200 €||1200 €||1200 €||1200 €|
|Employee Price per man-hour worked||11,57 €||11,46 €||10,01 €||10,37 €|
|Cost surcharge compared to contractual gross hourly wage||68 %||60 %||45 %||50%|
|Model employee #2: „blue collar“
gross contractual wage 800 €, works in 3-shifts, 12h paid overtimes per month, 48h in nightshifts per month, 12h Saturday, 12h Sunday and 12h state holiday worked per month, 2 kids, 45 years old, company with 500 employees, higher-risk environment
|Gross wage||800 €||800 €||800 €||800 €|
|Employee Price per man-hour worked||10.68 €||8,82 €||7,43 €||8.88 €|
|Cost surcharge compared to contractual gross hourly wage||132 %||92 %||62 %||93 %|
For non-euro countries, exchange rate average for q1-q3 was applied
While the gross wage being the same, the true cost per hour worked differs widely among the countries. The relative size of the Employee Price changes when we change the model employee, with some countries having higher obligatory payroll surcharges than others.
Employee Price calculators enable users not only to estimate the direct cost of taxation, but also the cost of additional labor regulations.
Find out more: https://employeeprice.org/