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Survey reveals burden on costs

A comparison of employee costs across Europe combining social security, mandatory and voluntary payments shows that France and Italy place the greatest burden on their employers.

The results are contained in a survey published last month by consultants, Sedgwick Noble Lowndes, as part of their annual 'Guide to Employee and Labour Law in Europe' which in-cludes a warning that Europe's onerous employer costs are placing it at a serious competitive disadvantage.

In its commentary, the consultancy says that the results confirm that those member states with an enviable social security system have an equally unenviable task of solving the mounting financial problems that lie ahead".

The survey notes that the European employers pay 35% of an employee's wages in additional payments compared to 23% in the US, 24% in Japan and less than 20% in the tiger economies.

One hundred units of benefit cost an additional 51% in Italy and 49% in France while outside the EU, Poland and Hungary also place a high burden at 48% and 47% respectively. The most competitive countries in the EU are Denmark with 7%, Luxembourg with 14%, the UK with 20% and the Netherlands with 21%.

The survey continues: "Countries like Belgium, France and Italy have progressively increased what was al-ready a high level of social security contributions from employers or em-ployees or both."

The survey's conclusion is pessim-istic about Europe's prospects without reform. "A return to healthy economic growth is being held back by the constant need to take more from either corporate or individual in-comes, or from both," it says.

"This coupled with the need to keep to the pre-monetary union limits on public spending deficits only succeeds in dampening the chance of a return to higher economic growth without which the financing of social security will become ever more problematic."

The EU average for mandatory contributions is 30%, which compares to 14% in Japan and 9% in the US. However, the 15 member states can be divided into five groups (see table above).

As to pensions income replacement, the Greek 103% level is followed by Italy and Germany where the average em-ployee can expect 95% and 94%, with Spain 89%, the Netherlands 82% while in France and the UK the figure was 77%. The US and Japanese figures were 88% and 70% respectively.

John Lappin"

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