When you look at a job offer, you see a gross salary. What you don’t see is the employer social-security contribution stacked on top of it — money your employer pays to the state that never reaches your wage or your payslip. The OECD includes it in the tax wedge precisely because it is part of the true cost of employing you.
How big is it?
Across the OECD, employer contributions average about 16.4% of total labour cost for a single average worker — bigger than the OECD-average income-tax share (15.4%). In several countries it dwarfs income tax:
| Country | Employer SSC (% of labour cost) | Income tax (% of gross) | Total tax wedge |
|---|---|---|---|
| France | 36.3% | 16.2% | 46.8% |
| Italy | 31.6% | 22.1% | 45.1% |
| Sweden | 31.4% | 16.9% | 42.1% |
| Spain | 30.4% | 15.6% | 40.2% |
| Germany | 20.0% | 17.0% | 47.9% |
| United States | 8.1% | 16.6% | 29.9% |
| Denmark | 0.6% | 36.0% | 36.4% |
In France, the employer contribution alone is larger than the entire US tax wedge. Denmark shows the opposite design: a 0.6% employer contribution and a heavy income tax instead.
Why it matters
- It raises the cost of hiring. A worker on the same net pay costs a French employer far more than a Danish one, which affects competitiveness and where companies create jobs.
- It’s invisible to workers. Because it isn’t deducted from gross pay, people routinely underestimate how heavily their labour is taxed.
- Economists think workers bear it. The standard view is that, over time, high employer contributions show up as lower gross wages — so the “employer” label is partly a fiction about who really pays.
The takeaway
If you only compare income-tax rates, you’ll badly misjudge how heavily two countries tax work. The employer wedge is why a country like France can have a moderate income tax yet one of the heaviest overall burdens on labour.
Related reading
- What is the tax wedge? — the full definition.
- Highest employer social-security countries — the full ranking.
- Highest tax wedge countries — see how much is employer-side.
- Compare two countries’ wedges side by side in our comparisons.
Figures from OECD Taxing Wages (2023 data year), CC BY 4.0. Modelled averages for a representative worker — not personal tax advice.