BUSINESS

Deductions render salary raises pointless

THANOS TSIROS

TAGS: Economy, Finance

Greece is not a good place to seek a pay raise. In the private sector, for an average employee on a monthly net salary of 1,168 euros to get a raise of just 45 euros a month, their employer has to pay twice that amount, 90 euros, with half of it going to the tax authorities and the Single Social Security Entity (EFKA).

Worse, if an employee is privileged enough to receive a high monthly salary of between 1,800 and 1,900 euros net, which is about twice the country’s average, their employer will have to pay an extra 100 euros per month in order for the employee to get a raise of 37 euros net – meaning they would get just one in three additional euros spent by the company on them.

The huge amount of deductions, which can reach up to 63 percent for workers on high salaries, is nowadays the strongest disincentive for the creation of well-paid jobs and improving salaries in the private sector that during the crisis have declined by more than 27 percent on average.

Consequently employers are very well aware that even if they do shoulder the cost of increasing staff salaries – whether in a bid to boost production, show appreciation or whatever – the ones that will emerge as the real winners will be EFKA and the tax authorities.
 

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