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A new survey by Deloitte of employee remuneration in enterprises with 10 or more employees shows a wide divergence in average remuneration levels and social security costs in 24 of the 25 EU member states. The survey highlights that a wide gap still exists in the remuneration levels of EU member states that joined in May 2004 and the original 15 members. 

According to the survey, Lithuania has the lowest remuneration costs at just over €5,100.  Estonia and Slovenia are not far behind with remuneration levels of €9,216 and €9,264. These figures represent a considerable increase over the figures for 2005 which were €7,466 and €8,321 respectively. 

Ireland is ranked 15th out of the 24 countries surveyed with an average remuneration cost of €36,852. In 2005 the figure was €34,997 – this represents an increase of 5.3%.

A positive aspect of Budget 2006 is that for the second year in a row it has not added to the total cost of employment while at the same time reducing the total tax on the employee by €530.

However, the relative positions of the countries changes when one compares the employee tax and insurance costs as a proportion of the total remuneration paid.  Ireland continues to have the lowest level at 6.34% post Budget with Cyprus being in second place at 8.77%. This confirms Ireland as a low tax jurisdiction for employees.

Also, when one compares the employer social insurance costs as a percentage of remuneration, Ireland is in fifth position. Denmark has the lowest percentage at 1.36%. Ireland at 9.71% is just behind Cyprus, Malta and the UK which have percentages at approximately 9.1%.

Comparing the combined costs of tax and employee and employer social insurance costs with the total cost of employment, Ireland post Budget is found to have the lowest percentage cost. This was only a marginal advantage in 2005 but the gap between Ireland and Cyprus has increased to 1.44%.  Malta and Luxembourg continue to be third and fourth respectively.

Commenting on the results of the survey, Pat Cullen, tax partner with Deloitte, stated:

“The survey shows the continued commitment of the Irish Government to keep the tax and social welfare costs down and hence keep the costs of employment down. However, Ireland continues to be exposed to pressures from eastern Europe where employment costs are still relatively low. As those economies gather pace and start to compete more effectively for international mobile investment, Ireland will be at a considerable disadvantage.”

He added: “While it is unrealistic to expect Ireland to be able to close the gap in remuneration levels, the challenge for Ireland Inc is to effectively promote the added value that Ireland has to offer through it location, other taxation measures and experienced workforce so that it continues to attract sustainable investment to ensure its economic growth”.

About the survey

In completing the survey the remuneration levels for enterprises with 10 or more employees was taken as the benchmark. Employee tax is based on a married couple, one earner with two children.  Graphs are attached below.

About Deloitte

Deloitte Ireland is a world-class firm of expert business advisers, serving senior business leaders who are seeking to protect and create value in a complex, dynamic environment. Our objective is to help our clients succeed by anticipating tomorrow’s agenda with focused, insightful and fresh thinking borne out of our multidisciplinary strengths. We draw upon our specialist skills in audit, tax, consulting and financial advisory both within Ireland and across the Deloitte worldwide network. 

What’s different about Deloitte is our people, who focus on building long-term relationships and are determined to deliver measurable value for our clients’ business. With almost 900 people in Dublin, Cork and Limerick Deloitte is known as an employer of choice for our innovative human resources programmes and is dedicated to helping our clients and our people excel. 
'Deloitte' refers to Deloitte & Touche and any associated partnerships and companies established under the laws of Ireland. Deloitte is the Irish member firm of Deloitte Touche Tohmatsu. For more information, please visit the Irish member firm’s website at www.deloitte.com/ie.