Italy faces high tax absorption of wage increases

Recent Eurostat data indicates a significant issue regarding wage increases in Italy, where a high percentage of earnings are absorbed by taxes, social contributions, and the loss of social benefits. For workers moving from low to medium-low income levels, the figure reported by Eurostat reached 97.1 percent, though this has sparked methodological debate.

In contrast, the OECD calculated a different figure of 38 percent for the same indicator. Experts suggest that the concentration of tax breaks and bonuses on the lowest income brackets may have inadvertently created an invisible barrier, where increased earnings result in negligible net gains due to the loss of existing benefits.

Additionally, the cost of one hour of labor in Italy was recorded at 32 euros in 2025, which is higher than the previous year but remains below the Eurozone average of 34.9 euros.