Monday, January 29, 2007
[IWS] OECD: MINIMUM WAGES, MINIMUM LABOUR COSTS AND THE TAX TREATMENT OF LOW-WAGE EMPLOYMENT [18 January 2007]
IWS Documented News Service
_______________________________
Institute for Workplace Studies----------------- Professor Samuel B. Bacharach
School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies
Cornell University
16 East 34th Street, 4th floor---------------------- Stuart Basefsky
New York, NY 10016 -------------------------------Director, IWS News Bureau
________________________________________________________________________
OECD
OECD SOCIAL, EMPLOYMENT AND MIGRATION WORKING PAPERS NO. 46
MINIMUM WAGES, MINIMUM LABOUR COSTS AND THE TAX TREATMENT OF LOW-WAGE EMPLOYMENT [18 January 2007]
Herwig Immervoll
http://www.oecd.org/dataoecd/30/34/37930738.pdf
[full-text, 24 pages]
SUMMARY
1. International comparisons of minimum-wage levels have largely focused
on the gross value of minimum wages, ignoring the effects of taxation on
both labour costs and the net income of employees. This paper presents
estimates of the tax burdens facing minimum-wage workers. These are used
as a basis for cross-country comparisons of the net earnings of these
workers as well as the cost of employing them. In addition, results show
the evolution of net incomes and labour costs during the 2000-2005 period
and the relative importance of minimum-wage adjustments and tax reforms in
driving these changes.
2. Statutory minimum wages are in place in 21 OECD countries, ranging
between USD 0.7 and USD 10 per hour. In a number of countries,
minimum-wage levels have gone up in real terms in recent years. Given
considerable tax burdens even at the lowest wage levels, tax policy
measures can have a sizable impact on the net earnings available to
low-wage workers. Social contributions and payroll taxes add, on average,
around 15% to the cost of employing minimum-wage workers. The
international variation of minimum labour costs in dollar terms is
enormous, with hourly costs in the highest-cost country (the Netherlands)
exceeding those at the bottom (Mexico) by a factor of 12. Differences are
also large when compared across countries that are closer geographically
or whose economies are more integrated. Despite reductions in non-wage
labour costs in several countries, there has been no convergence of
minimum labour costs in recent years.
3. This paper is the working paper version of a chapter to appear in the
2007 edition of Taxing Wages, an annual OECD publication. The Taxing Wages
chapter will include results for 2006.
______________________________
This information is provided to subscribers, friends, faculty, students and alumni of the School of Industrial & Labor Relations (ILR). It is a service of the Institute for Workplace Studies (IWS) in New York City. Stuart Basefsky is responsible for the selection of the contents which is intended to keep researchers, companies, workers, and governments aware of the latest information related to ILR disciplines as it becomes available for the purposes of research, understanding and debate. The content does not reflect the opinions or positions of Cornell University, the School of Industrial & Labor Relations, or that of Mr. Basefsky and should not be construed as such. The service is unique in that it provides the original source documentation, via links, behind the news and research of the day. Use of the information provided is unrestricted. However, it is requested that users acknowledge that the information was found via the IWS Documented News Service.
Stuart Basefsky
Director, IWS News Bureau
Institute for Workplace Studies
Cornell/ILR School
16 E. 34th Street, 4th Floor
New York, NY 10016
Telephone: (607) 255-2703
Fax: (607) 255-9641
E-mail: smb6@cornell.edu
****************************************
_______________________________
Institute for Workplace Studies----------------- Professor Samuel B. Bacharach
School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies
Cornell University
16 East 34th Street, 4th floor---------------------- Stuart Basefsky
New York, NY 10016 -------------------------------Director, IWS News Bureau
________________________________________________________________________
OECD
OECD SOCIAL, EMPLOYMENT AND MIGRATION WORKING PAPERS NO. 46
MINIMUM WAGES, MINIMUM LABOUR COSTS AND THE TAX TREATMENT OF LOW-WAGE EMPLOYMENT [18 January 2007]
Herwig Immervoll
http://www.oecd.org/dataoecd/30/34/37930738.pdf
[full-text, 24 pages]
SUMMARY
1. International comparisons of minimum-wage levels have largely focused
on the gross value of minimum wages, ignoring the effects of taxation on
both labour costs and the net income of employees. This paper presents
estimates of the tax burdens facing minimum-wage workers. These are used
as a basis for cross-country comparisons of the net earnings of these
workers as well as the cost of employing them. In addition, results show
the evolution of net incomes and labour costs during the 2000-2005 period
and the relative importance of minimum-wage adjustments and tax reforms in
driving these changes.
2. Statutory minimum wages are in place in 21 OECD countries, ranging
between USD 0.7 and USD 10 per hour. In a number of countries,
minimum-wage levels have gone up in real terms in recent years. Given
considerable tax burdens even at the lowest wage levels, tax policy
measures can have a sizable impact on the net earnings available to
low-wage workers. Social contributions and payroll taxes add, on average,
around 15% to the cost of employing minimum-wage workers. The
international variation of minimum labour costs in dollar terms is
enormous, with hourly costs in the highest-cost country (the Netherlands)
exceeding those at the bottom (Mexico) by a factor of 12. Differences are
also large when compared across countries that are closer geographically
or whose economies are more integrated. Despite reductions in non-wage
labour costs in several countries, there has been no convergence of
minimum labour costs in recent years.
3. This paper is the working paper version of a chapter to appear in the
2007 edition of Taxing Wages, an annual OECD publication. The Taxing Wages
chapter will include results for 2006.
______________________________
This information is provided to subscribers, friends, faculty, students and alumni of the School of Industrial & Labor Relations (ILR). It is a service of the Institute for Workplace Studies (IWS) in New York City. Stuart Basefsky is responsible for the selection of the contents which is intended to keep researchers, companies, workers, and governments aware of the latest information related to ILR disciplines as it becomes available for the purposes of research, understanding and debate. The content does not reflect the opinions or positions of Cornell University, the School of Industrial & Labor Relations, or that of Mr. Basefsky and should not be construed as such. The service is unique in that it provides the original source documentation, via links, behind the news and research of the day. Use of the information provided is unrestricted. However, it is requested that users acknowledge that the information was found via the IWS Documented News Service.
Stuart Basefsky
Director, IWS News Bureau
Institute for Workplace Studies
Cornell/ILR School
16 E. 34th Street, 4th Floor
New York, NY 10016
Telephone: (607) 255-2703
Fax: (607) 255-9641
E-mail: smb6@cornell.edu
****************************************
# posted by SBasefsky : 5:35 AM
