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Employersnowpayaverageemploymentcostsworth
nearly25%ofemployeessalaries
Havegovernmentspushedemploymenttaxestoohigh?
BrazilandEuropehitemployerswithhighestemploymentcosts
Theaverageextracost,acrosstheworld,tobusinessesinsocialsecurityandothertaxesof
employingaworkerisnowalmost23%ofanemployeessalary*,accordingtoresearchbyUHY,the
internationalaccountingandconsultancynetwork.
UHYtaxprofessionalsstudieddatain25countriesacrossitsinternationalnetwork,includingall
membersoftheG7andtheemergingBRICeconomies.UHYcalculatedthevalueofpaymentsa
companyhadtomake,suchassocialsecuritycontributions,ontopofthegrosssalarytheypayto
individualemployees(seetablesbelow).
UHYsaysthattheaverageemployerwillhavetopayoutanextraUSD6,757ontopofagrosssalary
ofUSD30,000invariousemploymentcosts(22.5%ofgrosssalary),frommandatorypension
provisionstohealthcarecover.ForagrosssalaryofUSD300,000theaverageemployerhastopay
anextraUSD41,206,13.7%ofthegrosssalary.
LadislavHornan,ChairmanofUHY,says:Governmentsinmanycountrieshaveheapedonextra
employmentcostsoverthepastdecadeorso.Incountrieswithprecariousfinancialpositionsand
unemploymentproblems,highemploymentcostsarenowunderminingthejobcreationagenda.
Loweremploymentcostscanhelplabourmarketflexibilityandnewbusinesscreation,whichcanbe
vitalinperiodsofeconomicdifficulty.
LadislavHornanadds:Manyofthesocialsecuritystructuresthatexisttodaywereputinplace
decadesago,andtheprinciplesbehindthemhaventbeentouchedfordecades.Somewouldargue,
employmentcostshavebeenallowedtogrowuncheckedasaresult.
ThecountrieswiththeconsistentlylowestemploymentcostsareplacesliketheUS,Denmark,
India,andCanada.
UHYaddsthatsevenofthetencountrieswiththehighestemploymentcostsforlowormiddle
incomeworkersareEuropean.AnaverageEuropeanemployermustpayanextraUSD17,860
(23.8%ofgrosssalary)onsalariesofUSD75,000AmericanemployershavetopayanextraUSD
6,182(8.2%)andChineseemployershavetopayanextraUSD9,263(12.4%).
LadislavHornansays:NowthatpartsoftheworldparticularlyEuropearestruggling
economicallyandhaveincreasinglyelderlypopulationsandfewerworkerscontributingtothesocial
securitysystem,existingsocialsecuritystructurescouldbecomeevenmoreofaburdenfor
businesses.
WehavetheterriblesituationwherehighemploymentcostsmayactuallyprolongtheEuropean
unemploymentcrisis.BusinessesinsomeEuropeancountrieswillbeunwillingtotakeonnew
workersknowingthatthesalarytheypaytheworkerisactuallyjustafractionofwhatthatworker
willactuallycost.
LadislavHornanaddsEuropemighthavecomparativelylowemploymentcostsforveryhigh
earners,butthiswonthelpbusinessesthatcantaffordtohirethehugenumberofunemployed
graduatesoryoungpeoplelookingfortheirfirstjob.
UHYsaysthataverageG7employershavetopayanextraUSD7,263(24.2%)ontopofagrosssalary
ofUSD30,000,andanextraUSD61,063(20.4%)ontopofsalariesofUSD300,000.Foraverage
employersinBRICcountries,therespectiveemploymentcostsareUSD8,488(28.3%)andUSD
56,565(18.9%).
UHYaddsthatthereisahugedisparitybetweencountrieswiththehighestemploymentcostsand
thosewiththelowest.EmploymentcostsforgrosssalariesofUSD30,000are16timeshigherinthe
countrieswiththeheaviestburdenthantheyareincountrieswiththecheapestemploymentcosts.
ForsalariesofUSD300,000,employmentcostsinthemostexpensivecountryBrazilare40times
higherthanthoseinthecheapestcountryDenmark.BrazilianemployersmustpayanextraUSD
172,667ontopofagrosssalaryofUSD300,000(57.6%ofgrosssalary),whileDanishemployers
mustpayanextraUSD4,332(1.4%).
LadislavHornansays:WhilethemostexpensivecountriesaretypicallyEuropean,Brazilactuallyhas
theheaviestemploymentcostsinthestudy.Brazilhasconsistentlyhighemploymentcostsfor
employeesatallsalarylevels,withemployershavingtoregularlypayoutover50%ofanemployees
salaryinextracosts.
Brazilhassacrificedlowemploymentcostsforlowpersonaltaxesorindirecttaxes.Thismightbea
boostfortheconsumereconomy,butthisbalancecouldhurtthenewbusinessandjobcreationthat
isneededtokeepeconomicgrowthsustainable.
UHYaddsthattherearealsosignificantdisparitiesbetweenemploymentcostswithinEurope.
EmployersinItalytheEuropeancountrywiththehighestemploymentcostshavetopayanextra
USD15,544insocialsecuritycostsontopofasalaryofUSD30,000(55%ofgrosssalary).In
Denmark,employershavetopayanextraUSD1,632just5.4%ofthegrosssalary.
LadislavHornansays:CountriesliketheUK,Germany,Ireland,orDenmarkhaveanadvantagein
thattheiremploymentcostsarefarlowerthanthoseelsewhereintheSingleMarket.Itsmuch
cheapertostartanewbusinessandtakeonnewworkersthanitisanywhereelseinEurope.
EricWaidergorn,DirectorofUHYMoreiraandmemberofUHYinBrazil,says:Brazilsemployment
costsareexceptionallyhigh,whichwillholdbacknewbusinessdevelopmentandjobcreationand
couldencourageinformalemploymentarrangements.Whiledirectpersonaltaxesarelow,
comparedtodevelopedcountriesandBRICs,highemploymentcostsareasignificanthurdleto
Brazilseconomicdevelopment.
MartinCairnsofMcGovern,Hurley,Cunningham,LLPandmemberofUHYinCanada,says:Unlike
othercountries,Canadahasmanagedtokeepitsmandatoryemploymentcostsrelativelylowasa
percentageofsalariesoverthepastcoupleofyears,leavingCanadianbusinesseswithsomeofthe
lowestmandatoryemploymentcostsintheworld.ThiswillhavecontributedtoCanadian
businesses'abilitytocopewiththedipininternationaltradethatfollowedthefinancialcrisis.
2
JohnBain,ManagingDirectorofUHY,Bain&AssociatesandmemberofUHYInternationalinThe
Bahamas,says:InTheBahamas,theBahamiangovernmentremainsthelargest
employer.Governmentemployeescanenjoybenefitsthatmayincreasethepaymentsmadeto
employeesanywherefrom18%toasmuchas2730%,dependingontheirlevelsinthegovernment,
theamountoftrainingandtravelandtheassociatedbenefitsincludingnoncontributorypension
costs.Privatesectoremployersmaypaybetween1015%abovethenormalwagesforvarious
reasons.Hotelscommonlyprovidefoodandattimestransportation.Theprivateandgovernmental
employerswouldalsopayforpaidvacationtime,nationalinsurancecontributions,pension
contributions,medicalinsurancecontributionsandovertime,ifneeded.Notethatthesecostscan
increaseevenfurtherbyhiringexpatriateworkersforspecializedareasthatrequireadditionalskills.
Inthiscase,theworkpermitmayaddasmuchas$9,000to$20,000.Ifthecompanyisalso
responsibleforrent,thenthetotalcostofanexpatriateworkercouldtop50%overthegross
salary.ThetotalcostofemploymentcanbeasignificantbarriertoreducingunemploymentinThe
Bahamas.WhileIdontthinkthatTheBahamasisthehighestintheregion,thetotalemployeecost
shouldbemonitoredcarefullybythegovernmenttoensurethatwemaintainourcompetivenessfor
theattractionofforeigninvestment.Mr.Baincontinued:Wemustfindawaytoencouragethe
hiringofBahamiansbymakingiteasytodoandreasonableincomparisontoanyadditional
employeecost.Ifnot,weriskpricingourselvessohighthatitmaymakeusuncompetitiveinterms
ofourcost.
PaymentsmadebybusinessesontopofgrosssalariesbyUSDandpaymentsas%ofgrosssalary
#
1
2
3
4
5
6
7
8
10
11
12
13
14
15
16
17
18
19
Country
Brazil
Italy
France
Slovakia
CzechRepublic
Spain
Austria
China
BRICAverage
Romania
EuropeAverage
Japan
G7Average
Germany
GlobalAverage
Mexico
Russia
Australia
Netherlands
Israel
Malaysia
Nigeria
Ireland
$30,000
$17,267
$15,544
$12,836
$10,560
$10,200
$10,020
$9,357
$9,263
$8,488
$8,421
$7,999
$7,738
$7,263
$6,841
$6,757
$6,788
$6,319
$5,249
$4,867
$4,221
$3,804
$3,600
$3,225
$30,000
57.56%
51.84%
42.79%
35.20%
34.00%
33.40%
31.19%
30.88%
28.29%
28.07%
26.67%
25.79%
24.21%
22.81%
22.52%
22.63%
21.06%
17.50%
16.22%
14.07%
12.68%
12.00%
10.75%
#
1
2
3
4
5
6
7
10
11
12
13
14
15
16
17
18
19
Country
Brazil
Italy
France
Austria
CzechRepublic
Slovakia
Japan
EuropeAverage
Spain
G7Average
BRICAverage
Germany
GlobalAverage
Australia
Romania
Netherlands
Russia
Mexico
China
Malaysia
Nigeria
UnitedKingdom
Ireland
$75,000
$43,167
$37,374
$32,277
$23,392
$22,774
$21,687
$19,345
$17,860
$17,847
$17,830
$16,500
$15,810
$14,582
$13,122
$12,684
$11,749
$10,819
$10,206
$9,263
$9,204
$9,000
$8,582
$8,063
$75,000
57.56%
49.86%
43.04%
31.19%
30.36%
28.92%
25.79%
23.82%
23.80%
23.78%
22.00%
21.08%
19.44%
17.50%
16.91%
15.67%
14.43%
13.61%
12.35%
12.27%
12.00%
11.44%
10.75%
3
20
21
22
23
24
25
Canada
USA
UnitedKingdom
UAE
Denmark
India
$2,745
$2,652
$2,486
$2,182
$1,632
$1,101
9.15%
8.84%
8.29%
7.26%
5.44%
3.67%
20
21
22
23
24
25
Israel
USA
Canada
UAE
India
Denmark
$7,147
$6,182
$5,242
$4,772
$2,753
$2,082
9.53%
8.24%
6.99%
6.35%
3.67%
2.78%
#
Country
$300,000
$300,000
1
Brazil
$172,667
57.56%
Italy
$146,523
48.86%
3
France
$124,062
41.35%
4
Japan
$77,379
25.79%
G7Average
$61,063
20.36%
BRICAverage
$56,565
18.85%
5
Australia
$52,488
17.50%
Austria
$45,870
15.29%
6 EuropeAverage
$44,454
14.82%
7
CzechRepublic
$43,024
14.34%
GlobalAverage
$41,206
13.74%
8 UnitedKingdom
$39,294
13.10%
9
Malaysia
$36,204
12.07%
10
Nigeria
$36,000
12.00%
11
Russia
$33,319
11.11%
12
Ireland
$32,250
10.75%
13
Romania
$27,197
9.07%
14
Slovakia
$23,487
7.83%
15
UAE
$19,177
6.38%
16
Spain
$17,847
5.95%
17
Germany
$17,817
5.94%
18
Mexico
$15,831
5.28%
19
USA
$12,283
4.09%
20
Netherlands
$11,749
3.92%
21
India
$11,010
3.67%
22
Israel
$10,985
3.65%
23
Canada
$10,079
3.36%
24
China
$9,263
3.09%
25
Denmark
$4,332
1.44%
*Basedona
grossannual
salaryofUSD30,000
Figuremayvaryslightlydependingonstate
NotesforEditors
TolearnmoreabouttheservicesandcapabilitiesUHYBain&Associatescanoffer,pleasecontact
JOHNS.BAIN,atjohn@uhybs.com.
AboutUHYBain&Associates
UHYBain&AssociatesisamemberofUHY,aninternationalnetworkofindependentaccounting
andconsultingfirmswithofficesinmajorbusinesscentresthroughouttheworld.Further
informationcanbefoundatwww.uhybs.com
PressEnquiries
DianePhilips
DianePhilips&Associates
Tel:(242)3940677
ForUHY,theinternationalnetwork
DominiqueMaeremans
+442077672621,oremail:d.maeremans@uhy.com
NickCroysdillorNickCosgrove
MattisonPublicRelations
+442076453636or+447815823412ornick.croysdill@mattison.co.uk
AboutUHY
Establishedin1986andbasedinLondon,UK,UHYisanetworkofindependentaccountingand
consultingfirmswithofficesinover270majorbusinesscentresin86countries.Over7,100staff
generatedanaggregateincomeofUSD621millionin2012,rankingUHYthe25thlargest
internationalaudit,accounting,taxandconsultancynetwork(byrevenue).EachmemberofUHYisa
legallyseparateandindependentfirm.ForfurtherinformationonUHYpleasegotowww.uhy.com.
UHYisafullmemberoftheForumofFirms,anassociationofinternationalnetworksofaccounting
firms.ForadditionalinformationontheForumofFirms,visitwww.forumoffirms.org
END