This chapter presents the main results of the analysis of the taxation of labour income across OECD member countries in 2017. Most emphasis is given to the tax wedge – a measure of the difference between labour costs to the employer and the corresponding net take-home pay of the employee – which is calculated by expressing the sum of personal income tax, employee plus employer social security contributions together with any payroll tax, minus benefits as a percentage of labour costs. The calculations also focus on the net personal average tax rate. This is the term used when the personal income tax and employee social security contributions net of cash benefits are expressed as a percentage of gross wage earnings. The analysis focuses on the single worker, with no children, at average earnings and makes a comparison with the single earner married couple with two children, at the same income level. A complementary analysis focuses on the two earner couple with two children, where one spouse earns the average wage and the other 67% of it.
Taxing Wages 2018
Chapter 1. Overview
Abstract
The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law.
This Report provides unique information for each of the thirty-five OECD countries on the income taxes paid by workers, their social security contributions, the transfers they receive in the form of cash benefits, as well as the social security contributions and payroll taxes paid by their employers. Results reported include the marginal and average tax burden for one- and two-earner households, and the implied total labour costs for employers. These data are widely used in academic research and in the formulation and evaluation of social and economic policies. The taxpayer-specific detail in this Report enables it to complement the information provided annually in Revenue Statistics, a publication providing internationally comparative data on tax levels and tax structures in OECD countries. The methodology followed in this Report is described briefly in the introduction section below and in more detail in the Annex.
The tables and charts present estimates of tax burdens and of the tax “wedge” between labour costs and net take-home pay for eight illustrative family types on comparable levels of income. The key results for 2017 are summarised in second section below. Part I of the Report presents more detailed results for 2017, together with comparable results for 2016 and discusses the changes between the two years. Part II of the Report reviews historical changes in tax burdens between 2000 and 2017.
The present Chapter 1 begins with an introduction to the Taxing Wages methodology that is followed by a review of the results of tax burden indicators for 2017. The review includes the tax wedge and the personal average tax rates results for a single worker, without children, earning the average wage, and also the corresponding indicators for a one-earner couple at the average wage level and a two-earner couple where one spouse earns the average wage and the other 67% of it, and assumes that both couples have two children. Finally, the chapter ends with a section on the change in the average wage levels by country and the industry classification on which they are based.
Introduction
This section briefly introduces the methodology employed for this Report, which focuses on full-time employees. It is assumed that their annual income from employment is equal to a given percentage of the average full-time adult gross wage earnings for each OECD economy, referred to as the average wage (AW). This covers both manual and non-manual workers for either industry sectors C-K inclusive with reference to the International Standard Industrial Classification of All Economic Activities, Revision 3 (ISIC Rev.3) or industry sectors B-N inclusive with reference to the International Standard Industrial Classification of All Economic Activities, Revision 4 (ISIC Rev.4).1 Further details are provided in Table 1.8 as well as in the Annex of this Report. Additional assumptions are made about the personal circumstances of these wage earners in order to determine their tax/benefit position.
In the Report, the term tax includes the personal income tax, social security contributions and payroll taxes (which are aggregated with employer social contributions in the calculation of tax rates) payable on gross wage earnings. Consequently, any income tax that might be due on non-wage income and other kinds of taxes – e.g. corporate income tax, net wealth tax and consumption taxes – are not taken into account. The transfers included are those paid by general government as cash benefits, usually in respect of dependent children.
For most OECD countries, the tax year is equivalent to the calendar year, the exceptions being Australia, New Zealand and the United Kingdom. In the case of New Zealand and the United Kingdom, where the tax year starts in April, the calculations apply a “forward-looking” approach. This implies that, for example, the tax rates reported for 2017 are those for the tax year 2017-18. However, in Australia, where the tax year starts in July, it has been decided to take a ’backward looking’ approach in order to present more reliable results. So, for example, the year 2017 in respect of Australia has been defined to mean its tax year 2016-17.
The Report presents several measures of taxation on labour. Most emphasis is given to the tax wedge – a measure of the difference between labour costs to the employer and the corresponding net take-home pay of the employee – which is calculated by expressing the sum of personal income tax, employee plus employer social security contributions together with any payroll tax, minus benefits as a percentage of labour costs. Employer social security contributions and – in some countries – payroll taxes are added to gross wage earnings of employees in order to determine a measure of total labour costs. However, it should be recognised that this measure may be less than the true labour costs faced by employers because, for example, employers may also have to make non-tax compulsory payments.2 The average tax wedge measures identify that part of total labour costs which is taken in tax and social security contributions net of cash benefits. In contrast, the marginal tax wedge measures identify that part of an increase of total labour costs that is paid in taxes and social security contributions less cash benefits.
The calculations also focus on the net personal average tax rate. This is the term used when the personal income tax and employee social security contributions net of cash benefits are expressed as a percentage of gross wage earnings. The net personal marginal tax rate shows that part of an increase of gross wage earnings that is paid in personal income tax and employee social security contributions net of cash benefits.
Review of result for 2017
Tax wedge
Table 1.1 shows that the tax wedge between total labour costs to the employer and the corresponding net take-home pay for single workers without children, at average earnings levels, varied widely across OECD countries in 2017 (see column 1). While in Austria, Belgium, France, Germany, Hungary and Italy, the tax wedge is over 45%, it is 20% or lower in Chile, Mexico and New Zealand. The highest tax wedge is observed in Belgium (53.7%) and the lowest in Chile (7.0%). Table 1.1 shows that the average tax wedge in OECD countries was 35.9% in 2017.
Table 1.1. Comparison of total tax wedge
As % of labour costs
Note : Single individual without children at the income level of the average worker.
1. Countries ranked by decreasing total tax wedge.
2. Due to rounding, the changes in tax wedge in column (2) may differ by one-hundredth of a percentage point from the sum of columns (3)-(5). For Denmark, the Green Check (cash benefit) contributes to the difference as it is not included in columns (3)-(5).
3. Includes payroll taxes where applicable.
Sources : Country submissions, OECD Economic Outlook Volume 2017 (No. 102).
The changes in tax wedge between 2016 and 2017 for the average worker without children are described in column 2 of Table 1.1. The OECD average decreased by 0.13 percentage points. Among the OECD member countries, the tax wedge increased in eighteen countries, fell in sixteen and remained unchanged in one. Decreases of one percentage point or more were observed in Hungary (2.10 percentage points), Luxembourg (1.76 percentage points) and Finland (1.18 percentage points). There were no increases exceeding one percentage point and the largest increase was observed in Turkey (0.41 percentage points).There was no change in the tax wedge for Chile.
In general, the rises in tax wedge rates were driven by higher income taxes (see column 3). This was the major factor in fifteen of the countries showing an overall increase. The largest increase in income taxes as a percentage of labour costs was in the Netherlands (0.63 percentage points), notably due to higher statutory income tax rates within the first three income brackets in the income tax schedule. By contrast, higher social security contributions account for virtually all of the increased tax wedge in Germany and Greece.
Decreases in the tax wedge were also derived for the most part from lower income taxes in nine OECD countries (Denmark, Estonia, Israel, Luxembourg, Norway, Portugal, Spain,3 Switzerland and the United Kingdom). Luxembourg was the only country where income tax as percentage of labour costs decreased by more than one percentage point (1.31 percentage points), as a result of a reformed income tax schedule (i.e. extended income brackets and lower tax rates) and wage-earner tax credit (i.e. changing from a flat to an increasing tax credit up to an income threshold and then decreases). In other six OECD countries (Canada, Finland, France, Hungary, Iceland and Italy), the decreasing tax wedges were mostly driven by lower social security contributions. Employer social security contributions as a percentage of labour costs dropped by 3.15 percentage points in Hungary where the total contribution rate declined from 27% to 22% in 2017. In Belgium, the overall decrease in the tax wedge by 0.24 percentage points resulted from a nearly equal reduction in income tax and employer social security contributions.
Table 1.2 and Figure 1.1 show the constituent components of the tax wedge in 2017, i.e. income tax, employee and employer social security contributions (including payroll taxes where applicable), as a percentage of labour costs for the average worker without children. The labour costs in Table 1.2 are expressed in US dollars with equivalent purchasing power.
Table 1.2. Income tax plus employee and employer social security contributions
As % of labour costs, 2017
Note : Single individual without children at the income level of the average worker.
1. Countries ranked by decreasing labour costs.
2. Due to rounding, the total in column (1) may differ by one tenth of a percentage point from the sum of columns (2)-(4). For Denmark, the Green Check (cash benefit) contributes to the difference as it is not included in columns (2)-(4).
3. Includes payroll taxes where applicable.
4. US dollars with equal purchasing power.
Sources : Country submissions, OECD Economic Outlook Volume 2017 (No. 102).
Figure 1.1. Income tax plus employee and employer social security contributions, 2017
Notes : Single individual without children at the income level of the average worker.
Includes payroll taxes where applicable.
The percentage of labour costs paid in income tax varies considerably within OECD countries. The lowest figures are in Chile (zero) and Korea (5.5%). The highest values are in Denmark (35.8%), with Australia, Belgium and Iceland all over 20%. The percentage of labour costs paid in employee social security contributions also varies widely, ranging from zero in Australia, Denmark and New Zealand to 17.4% in Germany and 19.0% in Slovenia. Employers in France pay 26.0% of labour costs in social security contributions, the highest amongst OECD countries. The corresponding figures are also 20% or more in nine other countries – Austria, Belgium, the Czech Republic, Estonia, Greece, Italy, the Slovak Republic, Spain and Sweden.
As a percentage of labour costs, the total of employee and employer social security contributions exceeds 20% in more than half of the OECD countries. It also represents at least one-third of labour costs in nine OECD countries: Austria, Belgium, the Czech Republic, France, Germany, Greece, Hungary, the Slovak Republic and Slovenia.
Personal average tax rates
The personal average tax rate is defined as income tax plus employee social security contributions as a percentage of gross wage earnings. Table 1.3 and Figure 1.2 show the personal average tax rates in 2017 for a single worker without children at the average earnings level. The average workers’ gross wage earnings figures in Table 1.3 are expressed in terms of US dollars with equivalent purchasing power. Figure 1.2 provides a graphical representation of the personal average tax rate decomposed between income tax and employee social security contributions.
Table 1.3. Income tax plus employee social security contributions, 2017
As % of gross wage earnings
Note : Single individual at the income level of the average worker, without children.
1. Countries ranked by decreasing gross wage earnings.
2. Due to rounding total may differ by one tenth of a percentage point from aggregate of columns for income tax and social security contributions
3. US dollars with equal purchasing power.
Sources : Country submissions, OECD Economic Outlook Volume 2017 (No. 102).
Figure 1.2. Percentage of gross wage earnings paid in income tax and employee social security contributions, 2017
Notes : Countries ranked by decreasing tax burden.
Single workers at the income level of the average worker.
Table 1.3 and Figure 1.2 show that on average, the personal average tax rate for a single worker at average earnings in OECD countries was 25.5% in 2017. Belgium at 40.5% of gross earnings had the highest rate with Denmark and Germany being the only other countries with rates of more than 35%. Chile and Mexico had the lowest personal average tax rates at 7.0 and 11.2% of gross average earnings respectively. Korea was the only other country with a rate of less than 15%.
The impact of taxes and benefits on a worker’s take-home pay varies greatly among OECD countries. Such wide variations in the size and make-up of tax wedges reflect in part differences in:
The overall ratio of aggregate tax revenues to Gross Domestic Product; and,
The share of personal income tax and social security contributions in national tax mixes.
The mix of income tax and social security contributions paid out of gross wage earnings also varies greatly between countries as illustrated in Figure 1.2.
In 2017, the share of income tax within the personal average tax rate was higher than the share of the employee social security contributions for 23 of the 35 OECD member countries. No employee social security contributions were levied in Australia, Denmark and New Zealand and the rates were 4% or less of gross earnings in Estonia, Iceland, Ireland and Mexico. In contrast, the single worker at the average wage level paid substantially more (i.e. over 6 percentage points) in employee social security contributions than in personal income tax in five countries – Chile, Greece, Japan, Poland and Slovenia. In Chile, the average worker did not pay personal income tax in 2017. In six countries – the Czech Republic, France, Germany, Israel, Korea and Turkey – the shares of personal income tax and employee social security contributions as percentages of gross earnings were very close (i.e. differences of 3 percentage points or less).
Single versus one-earner couple taxpayers
Table 1.4 compares the tax wedges for a one-earner married couple with two children and a single individual without children, at average earnings levels. These tax wedges varied widely across OECD countries in 2017 (see columns 1 and 2). The size of the tax wedge for the family is generally lower than the one observed for the individual without children, since many OECD countries provide a fiscal benefit to families with children through advantageous tax treatment and/or cash benefits. Hence, the OECD average tax wedge for the one-earner couple with two children was 26.1% compared to 35.9% for the single average worker.
Table 1.4. Comparison of total tax wedge for single and one-earner couple taxpayers
As % of labour costs
1. Countries ranked by decreasing tax wedge of the family.
2. One earner married couple with two children and earnings at the average wage level.
3. Single individual without children and earnings at the average wage level.
Sources : Country submissions, OECD Economic Outlook Volume 2017 (No. 102).
The tax savings realised by a one-earner married couple compared to a single worker are greater than 20% of labour costs in Luxembourg and Poland, and greater than 15% of labour costs in seven other countries – Belgium, Canada, the Czech Republic, Germany, Hungary, Ireland and Slovenia. The tax burdens of one-earner married couples and single workers on average wage are the same in Chile and Mexico and differ by less than three percentage points in Greece, Israel, Korea and Turkey (see columns 1 and 2).
In 29 of the 35 OECD countries, there was only a small change (not exceeding plus or minus one percentage point) in the tax wedge of an average one-earner married couple with two children between 2016 and 2017 (see column 3). There is no change in Chile. There is an increase of greater than 1 percentage point in Australia (2.74 percentage points) and Ireland (2.60 percentage points) as a result of lowered cash benefits and in Latvia (1.06 percentage points) as a result of the combined effect of reduced basic tax allowance and frozen cash benefit payment levels between the two years. In contrast, the tax wedge for families fell by 4.35 percentage points in Poland as a result of increased cash benefits, and by 3.05 percentage points in Hungary mainly due to the combined effect of reduced employer social security contributions and a higher tax allowance for families with two children. A decrease of more than one percentage point is also observed in Finland (1.16 percentage points) due to reduced income tax. By comparison, the change in the tax wedge of a single taxpayer without children at the average wage level was greater than one percentage point in three OECD countries (Finland, Hungary and Luxembourg). Detailed explanations on the latter are given in the section on the tax wedge above.
A comparison of the changes in tax wedges between 2016 and 2017 for the one-earner married couples with two children and single persons without children, at the average wage level, is shown in column 5 of Table 1.4. The fiscal preference for families increased in three OECD countries: France, Hungary and Poland. Additionally, the effects of changes in the tax system on the tax wedge were of the same magnitude for both family types in Mexico, Switzerland and Turkey. In three other countries; Belgium, Finland and Greece, the change in the tax wedge for the two family types differed by less than 0.05 percentage points. There were no changes at all in Chile.
Figure 1.3 compares the net personal average tax rate for the average worker between single individuals and a one-earner married couple with two children. These results show the same pattern as the tax wedge results. This is because employer social security contributions, which are not taken into account in the former but included in the latter, are independent of family type. Due to tax reliefs and cash benefits for families with children, the one-earner married couple’s disposable income is higher than the single individual’s by 20% or more of earnings in six countries – Poland (29.8%), Luxembourg (24.1%), the Czech Republic (23.5%), Canada (21.6%), Slovenia (21.4%) and Belgium (19.8%). At a lower extent, the disposable income is higher by less than 10% of earnings in twelve countries – Australia (8.3%), Spain (7.2%), Sweden (6.2%), Japan (6.0%), the Netherlands (5.8%), Finland (5.5%), the United Kingdom (5.3%), Norway (5.1%), Israel (2.7%), Greece and Korea (both 2.3%) and Turkey (2.0%). The burden is the same for both family types in Chile and in Mexico. In Poland, the net personal average tax rate for the one-earner couple on average earnings with two children was negative in 2017 (-4.8%) as a result of cash benefit payments that exceeded the household total income tax and social security contributions. This is the only country for which the net personal average tax rate is negative for this household type.
Figure 1.3. Income tax plus employee contributions less cash benefits, 2017
Notes : Countries ranked by decreasing rates for single taxpayer without children.
Family types: a single individual without children and earnings at the average wage level and a one earner married couple with two children and earnings at the average wage level.
Tax on labour income for two-earner couples
The preceding analysis focuses on two households with comparable levels of income: the single worker at 100% of average wage, and the married couple with one earner at 100% of average wage, with two children. This section extends the discussion to include a third household type: the two-earner married couple, earning 100% and 67% of average wage, with two children.
For this household type, the OECD average tax wedge as a percentage of labour costs for the household was 30.7% in 2017 (Figure 1.4 and Table 1.5). Belgium had a tax wedge of 46.2%, which was the highest among the OECD countries. The other countries with tax wedges exceeding 40% were Italy (41.5%), France (42.2%) and Germany (42.7%). At the other extreme, the lowest tax wedge was observed in Chile (6.7%). The countries with tax wedges of less than 20% were Switzerland (15.3%), Israel (15.8%), New Zealand (16.9%), Mexico (18.7%) and Ireland (19.0%).
Figure 1.4. Income tax plus employee and employer social security contributions less cash benefits, 2017
Note : Two earner married couple, one at 100% and the other at 67% of the average wage, with 2 children. Includes payroll taxes where applicable.
Table 1.5. Comparison of total tax wedge for two-earner couples with children
As % of labour costs
Note : Two-earner married couple, one at 100% and the other at 67% of the average wage, with 2 children.
1. Countries ranked by decreasing total tax wedge.
2. Due to rounding, the changes in tax wedge in column (2) may differ by one hundredth of a percentage point from the sum of columns (3)-(6).
3. Includes payroll taxes where applicable.
Sources : Country submissions, OECD Economic Outlook Volume 2017 (No. 102).
Figure 1.4 shows the average tax wedge and its components as a percentage of labour costs for the two-earner couple for 2017. On average across OECD countries income tax represented 10.6% of the labour costs and the sum of the employees and employers’ social security contributions represented 22.3% of this. The OECD tax wedge is net of cash benefits, which represented 2.2% of labour costs in 2017.
The cash benefits that are considered in the Taxing Wages publication are those universally paid to workers in respect of dependent children between the ages of six to eleven inclusive. In-work benefits that are paid to workers regardless of their family situation are also included in the calculations. For the observed two-earner couple, Denmark paid an income-tested cash benefit (the Green Check) that also benefited childless single workers.
Compared to 2016, the OECD average tax wedge of the two-earner couple decreased by 0.10 percentage points in 2017, as indicated in Table 1.5 (column 2), although it increased for 19 out of the 35 OECD countries, decreased in fifteen and remained unchanged in one (Chile). There were no increases of more than one percentage point and for half of the countries with an overall increase, the changes were of 0.20 percentage points or less. In contrast, the changes were greater than one percentage point for four of the countries with a decreasing tax wedge: Poland (1.22 percentage points), Finland (1.27 percentage points), Luxembourg (1.73 percentage points) and Hungary (2.67 percentage points).
In most countries with an increasing tax wedge, the change was mainly driven by higher income taxes. They accounted for the whole increase in the tax wedge in six countries: Australia, Korea, Mexico, New Zealand, Portugal and the United States. In contrast, increasing social security contributions were the main factor in Germany, Greece and Japan. Most of those increases in income tax or social security contributions were augmented by reduced cash benefits. In the United Kingdom, the combined impact of higher social security contributions (0.10 percentage points) and a decline in cash benefits (0.08 percentage points) in increasing the tax wedge was not offset by the decrease in income tax (0.11 percentage points). In Estonia the tax wedge increased mostly due to a decrease in cash benefits (0.20 percentage points).
Regarding the net personal average tax rate as a percentage of gross earnings the OECD average was 19.4% in 2017 for the two-earner couple with two children where one spouse earns the average wage and the other 67% of it. Table 1.6 shows the net personal average tax rates for the OECD countries and their components as a percentage of gross earnings. The family gross wage earnings figures in column 5 are expressed in terms of US dollars with equivalent purchasing power. Unlike the results shown in Table 1.3, in Table 1.6, cash benefits are taken into account and reduce the impact of the employees’ income taxes and social security contributions (columns 2 plus 3 minus column 4).
Table 1.6. Income tax plus employee social security contributions less cash benefits, 2017
For two-earner couples with two children, as % of gross wage earnings
Notes : Two earner married couple, one at 100% and the other at 67% of the average wage, with 2 children.
1. Countries ranked by decreasing gross wage earnings.
2. Due to rounding total may differ by one tenth of a percentage point from aggregate of columns for income tax, social security contributions and cash benefits.
3. US dollars with equal purchasing power.
Sources : Country submissions, OECD Economic Outlook Volume 2017 (No. 102).
The net personal average tax rate on the two-earner couple varied greatly among OECD countries in 2017, ranging from 6.7% in Chile to 31.6% in Germany. In other terms, the disposable income of the household after tax represented 93.3% of the couple’s gross wage earnings in Chile while it represented 68.4% in Germany. Two other countries had a net personal average tax rate exceeding 30%: Belgium (31.2%) and Denmark (31.1%). At the other extreme, the net personal average tax rate was 10% or less in Mexico (8.6%), Switzerland (10.0%) and Ireland (10.3%), as well as in Chile.
The Taxing Wages indicators focus on the structure of income tax systems on disposable income. To assess the overall impact of the government sector on people’s welfare other factors such as indirect taxes (e.g. VAT) should also be taken into account, as should other forms of income (e.g. capital income). In addition, non-tax compulsory payments that affect households’ disposable incomes are not included in the calculations presented in the publication, but further analyses on those payments are presented in the online report: www.oecd.org/tax/tax-policy/non-tax-compuslory-payments.pdf.
Wages
Table 1.7 shows the gross wage earnings in national currency of the average worker in each OECD member country for 2016 and 2017. The figures for 2017 are estimated by the OECD Secretariat by applying the change in the compensation per employee in the total economy as presented in the OECD Economic Outlook (No 102) database to the final average wage values provided by OECD member countries. More information on the values of the average wage and the estimation methodology is included in the Annex of this Report.
Table 1.7. Comparison of wage levels
1. Estimated percentage change in the total consumer price index.
2. Difference in the personal average tax rate of the average worker (single without children) between 2016 and 2017.
Sources : Country submissions, OECD Economic Outlook Volume 2017 (No. 102).
The annual change in 2017 – shown in column 3 – varied between a decrease of 0.1% in Switzerland and an increase of 7.9% in Turkey. To a large extent, the changes reflect the different inflation levels of individual OECD countries – see column 4 of Table 1.7. The annual change in real wage levels (before personal income tax and employee social security contributions) is within the range of -2% to +2% for 27 countries; see column 5 of Table 1.7. The remaining eight countries show changes that are above this range: Ireland (2.3%), Israel (2.6%), the Slovak Republic (2.7%), the Czech Republic (4.4%), Latvia, Hungary and Iceland (all 4.6%). In 21 out of the 35 OECD countries, taxpayers had higher real post-tax income in 2017 than in 2016 as real wages before tax increased faster or decreased slower than personal average tax rates (see column 6), the exceptions being Australia, Austria, Belgium, Greece, Italy, Korea, Mexico, the Netherlands, New Zealand, Spain, Switzerland, Sweden, Turkey, and the United States:
The real wage before tax decreased whereas the personal average tax rate increased in Australia, Austria, Greece, Italy, Mexico and Turkey.
The personal average tax rate increased faster than the real wage before tax in Korea, the Netherlands and New Zealand.
The personal average tax rate increased whereas the real wage before tax remained unchanged in the United States.
In Belgium and Sweden, the percentage changes were the same in both the real wage before tax and the personal average tax rate.
Finally, in Spain and Switzerland, the real wage before tax decreased faster than the personal average tax rate.4
When comparing wage levels, it is important to note that the definition of average wage earnings can vary between countries due to data limitations. For instance, some countries do not include the wages earned by supervisory and managerial workers and not all countries exclude wage earnings from part-time workers (see Table A.4 in the Annex).
Table 1.8 provides more information on whether the average wages for the years 2000 to 2017 are based on industry sectors C-K inclusive with reference to the International Standard Industrial Classification of All Economic Activities, Revision 3 (ISIC Rev.3) or industry sectors B-N inclusive with reference to the International Standard Industrial Classification of All Economic Activities, Revision 4 (ISIC Rev.4).
Table 1.8. AverageWage Industry Classification
1. Australia: based on ANZSIC06 such that the categories substantially overlap with ISIC 4, sectors B-N.
2. Austria: 2000-03 average wage values are not based on the NACE (ISIC) classification.
3. Chile: the values for 2000 to 2008 are estimates deriving from the annual changes in the average wages based on “CIIU Rev.3” (2009 = 100) between 2000 and 2008, and the average wage for 2009 based on CIIU Rev.4 (2016 = 100). From 2009, the values are based on ISIC4.CL2012 sectors B ton R, excluding O (8422) “Defense Activities” and O (8423) “Public order and safety activities”.
4. Denmark: The AW values are based on sectors B-N and R-S (NACE rev 2).
5. Greece: the average annual earnings refer to full time employees for the sectors B to N of NACE Rev 2, including Division 95 and excluding Divisions 37, 39 and 75 for 2008 onwards.
6. Iceland: using national classification system that corresponds with the NACE rev. 2 classification system.
7. Ireland: values from 2000 to 2007 are based on sectors C-E (NACE). From 2008 onwards, they are based on sectors B-E (NACE rev.2).
8. Israel: Information on data for Israel: http://oe.cd/israel-disclaimer.
9. Korea: average wage values are based on 6th Korean Standard Industrial Classification (KSIC) C-K for 2000-01, 8th KISC C-M for 2002 to 2007 and 9th KISC B-N except E for 2008 onwards.
10. Latvia: Values are based on NACE rev.2 and cover the private sector that includes commercial companies with central or local government capital participation up to 50%, commercial companies of all types without central or local government capital participation, individual merchants, and peasant and fishermen farms with 50 and more employees.
11. Mexico: 2000-17 AW values are based on the Mexican Classification of Economic Activities (Clasificación Mexicana de Actividades Económicas (CMAE)) which is based on one of the first versions of ISIC.
12. Netherlands: the average wages from 2012 onwards include all economic activities (sectors A to U from SBI2008). Values for the private sector only (sectors B to N) are not available.
13. New Zealand: see the note for Australia which applies from 2004.
14. Slovak Republic: average wage values based on ISIC Rev. 4 classification (B to N) and still include the self-employment data.
15. Turkey: the average wage is based on the average production worker wage ISIC rev. 3.1 sector D for years 2000 to 2006.
Most OECD countries have calculated average wage earnings on the basis of sectors B-N in the ISIC Rev. 4 Industry Classification at least since 2008. The exceptions are Mexico and the Netherlands (since 2012). Some countries have revised the average wage values for prior years as well. Average wage values based on the ISIC Rev. 4 Classification or any variant are available for all years for Australia, Canada, the Czech Republic, Estonia, Finland, Greece, Hungary, Iceland, Italy, Japan, Latvia, the Slovak Republic, Slovenia, Spain and Switzerland.
Australia (for all years) and New Zealand (years 2004 to 2017) have provided values based on the 2006 ANZSIC industry classification, divisions B to N, which substantially overlaps the ISIC Rev.4, sectors B to N. For New Zealand, the years prior to 2004 continue to be based on sectors C-K in ANZSIC. Turkey has provided values based on the NACE Rev.2 classification sectors B-N from 2007 onwards. Values for the years prior to 2007 are based on the average production worker wage (ISIC rev.3.1, sector D).
Notes
← 1. Not all national statistical agencies use ISIC Rev.3 or Rev.4 to classify industries. However, the Statistical Classification of Economic Activities in the European Community (NACE Rev.1 or Rev.2), the North American Industry Classification System (US NAICS 2012). the Australian and New Zealand Standard Industrial Classification (ANZSIC 2006) and the Korean Standard Industrial Classification ( 6th to 9th KISC) include a classification which broadly conforms either with industries C-K in ISIC Rev. 3 or industries B-N in ISIC Rev.4.
← 2. Non-tax compulsory payments are requited and unrequited compulsory payments to privately-managed funds, welfare agencies or social insurance schemes outside general governments and to public enterprises (www.oecd.org/tax/tax-policy/tax-database.htm#NTCP).
← 3. The decrease in the tax wedge was due to a change in the criterion – adopted for the first time in 2017 – concerning the treatment of the taxes levied at regional level (“Comunidades Autónomas”). Thus, until 2016 the approach was to take as reference a “regional” tax rate equal to the applicable State tax rate, in equivalent terms: the tax wedge was calculated on assessments made by reference to a total tax scale on the general taxable base which was twice the State tax rate. However, since at present each “Comunidad Autónoma” has its own and different tax scale it was considered that said approach was no longer valid for 2017. It was decided then that the most representative regional tax was that of Madrid Region with marginal rates lower to those of the State tax scale. This implies a reduction inthe average tax rate and therefore in the tax wedge, while it does not necessarily mean lower taxes in 2017 as compared to 2016.
← 4. See note 3.