Italy has highest social security contribution burden

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A survey by researchers at the "Bocconi University" of Milan, published in June 1999, indicates that the burden of social security contributions in Italy is higher than that in France, Germany, Spain and the UK.

A survey carried out by the Centre for the Study of Labour Economics Problems (Centro per lo studio dei problemi dell'economia del lavoro, Cespel) at the Bocconi University of Milan, published in June 1999, has confirmed that Italy is a leading country in terms of its obligatory social security contribution burden on pay. Cespel examined the social security contribution situation of five countries - France, Germany, Italy, Spain and the UK- as of 1 January 1999 and measured the impact of contributions paid by employers and employees. The survey compares the contributions relating to sickness and maternity leave, retirement pension, accidents at work and occupational diseases allowances, unemployment and child benefits. The results are summarised in the table below.

Italy is the country with the highest total social charges, adding up to 43.27% of gross pay, followed: closely by France (42.91%) and Germany (40.40%); at some distance by Spain (37.20%); and at a great distance by the UK, where obligatory contributions do not exceed 12.90%.

Italian employers have to bear the heaviest social security contribution burden of the five countries, at 34.08% of gross pay, and UK employers the lightest (5.20%). As regards the social contribution burden on employees, Germany - where social charges are divided equally between employer and employee - has the highest level (20.20%), while Spanish workers contribute the least (6.40%).

The Cespel study underlines the effects of a system of high obligatory social contributions:" high contributions levied on employers have negative effects on the wage bargaining system, because contributions are proportional to gross pay. When employers and trade unions agree on pay increases, they have to take into account the impact of social contributions on the agreed pay increases".

The survey points out the different criteria adopted by the various countries to establish the amount of the social security contribution. In Italy, for example, the social contribution burden varies according to the sector of activity, the size of the company (in terms of workforce), the personnel job-classification employed and the geographical area. The Italian and UK legislative regulations, unlike the other countries, do not provide for any earnings limit above which employees, and especially employers, do not have to pay the obligatory social contributions.

Source: Cespel, 1999.