Pay vs. labour cost — why your employer pays more than you see
The deductions on your payslip — income tax and your own social contributions — are only part of what the state takes from a job. The OECD calls that employee-side share the net personal average tax rate (NPATR), and it is what our net salary calculator uses. The full tax wedge (AV_TW) goes further: it also includes the contributions your employer pays on top of your gross salary, and measures all taxes as a share of the total labour cost of the job.
Estonia shows the difference clearly. The employee share is 23.25%, but the full tax wedge is 42.64% — almost half of what the employer pays for the job never shows up on the payslip. Here is the full tax wedge for a single person without children earning the average wage in all 20 countries we track:
| # | Country | Tax wedge (% of labour cost) |
|---|---|---|
| 1 | Belgium | 52.48% |
| 2 | Germany | 49.26% |
| 3 | France | 47.18% |
| 4 | Austria | 47.09% |
| 5 | Italy | 45.76% |
| 6 | Estonia | 42.64% |
| 7 | Finland | 42.48% |
| 8 | Spain | 41.44% |
| 9 | Sweden | 41.14% |
| 10 | Portugal | 39.34% |
| 11 | Norway | 36.39% |
| 12 | Netherlands | 35.94% |
| 13 | Denmark | 35.76% |
| 14 | Poland | 35.03% |
| 15 | Ireland | 32.63% |
| 16 | UK | 32.38% |
| 17 | Canada | 32.12% |
| 18 | USA | 29.98% |
| 19 | Australia | 27.90% |
| 20 | Switzerland | 22.98% |
Source: OECD Taxing Wages, AW100, single person without children (S_C0), 2025.
Central and Western European countries — Belgium, Germany, France and Austria — take more than 47% of total labour cost. The English-speaking countries and Switzerland stay under 33%. Estonia sits in the middle: its tax wedge is higher than in most of the comparison countries, but lower than in the Western European core. For the employee-side view only, see our gross-to-net article.
Figures: reference year 2025, from the datasets described on our methodology page.