Deloitte survey shows a wide divergence in pay, writes Cliff Taylor, Economics Editor.
Ireland is the ninth most expensive out of 19 EU members in terms of total cost of employment, according to a survey by Deloitte consultants.
However, the tax and social security burden here is the second lowest of the 19 members of the enlarged EU surveyed, with only Cyprus having a lower figure.
The figures showing that the tax and PRSI burden is at the bottom of the EU league as a percentage of the total cost of employment casts new light on the debate about the appropriate level of taxation here.
The low tax level, however, pushes up take-home pay here to close to the top of the EU table for an "average" married couple, as measured by the survey.
The survey shows a wide divergence in pay and social security levels across the EU and in particular highlights the lower pay levels in the new member-states. Pay and employer social security make up the total remuneration cost to the employer of paying someone.
The Slovak Republic has the lowest remuneration cost at just under €6,500, closely followed by Poland (€7,125) and Estonia (€7,423). The Czech Republic comes in next at €8,965.
With relatively high employer social security costs in some of the new member-states, the actual level of gross remuneration to employees is noticeably low at €4,800 in Slovakia and just over €6,000 in Poland. Ireland is ranked ninth out of the 19, with an average remuneration cost per employee of €33,668 after the Budget. Germany is top of the list with a total cost of €49,609.
The survey is based on enterprises with 10 or more employees and the employee tax element is based on a married couple with one earner and two children.
While Ireland is mid-table in terms of total cost, the tax and social security burden on employees is the second lowest as a percentage of total remuneration, according to the survey. It shows a €2,240 employee tax and PRSI cost here on a salary of €30,400. Cyprus is the only country with a lower burden.
Employee tax and social security amounts to 8 per cent of gross salary here.
At the top of the league are the Scandinavian countries, with Swedish employees facing a 31 per cent take from average wages and a 32 per cent burden in Finland. The UK figure is a 26 per cent burden on a slightly higher average salary of €37,888.
Ireland is also relatively low for employer PRSI, coming in fifth cheapest of the 19 countries, with a cost of €3,268 at the €33,668 salary level.
The countries with lower employer PRSI levels are Denmark, Cyprus, Malta and the UK. The highest employer social security costs are in France, Sweden and Belgium.
Looking at employee social security, Germany is at the top of the league, followed by France, although in the latter case the social security payment is the largest imposition on the employee, with a small direct income tax bill.
Mr Pádraig Cronin, tax partner with Deloitte, pointed out that for business the key factor was the total cost of employing people and that the comparisons with eastern Europe were particularly striking.
The new EU states could provide stiff competition to the Republic in terms of attracting inward investment, he said.
Poland has remuneration levels of 20 per cent less than ours, he said, emphasising the pressure on Ireland to control costs and boost productivity levels "so that we can give value to businesses for the higher level of remuneration paid".
In terms of take-home pay, Luxembourg is at the top of the league, with an average figure of €35,893. Denmark is second at €29,815. Ireland and the UK are effectively tied in third place with a figure around €27,960 after the Budget.
Relatively high tax and social security burdens reduce the amount of take-home pay in the countries where gross pay is highest, including Germany, Denmark and Luxembourg.
