Cutting taxes – the role of politics in wage poker


A reduction in indirect labor costs could help break deadlocked wage negotiations and create space equivalent to a fifteenth salary. The NEOS are now demanding a solution from the government.

Wage negotiations take place under precarious conditions. Negotiators are confronted with the highest inflation in fifty years. Metal workers are demanding a wage increase of 11.6 percent, but employers cannot agree to this. Possible solution through politics: reduction of indirect labor costs by 6.55 percentage points. This creates space the size of a 15th salary. Both parties can then negotiate this.

Here you will see a graph showing the share of salaries in the increase in inflation.

The NEOS Lab, the Pink Party Academy, did the calculations. A worker in the metal industry earns an average of 3,670 euros gross per month. This corresponds to labor costs of 66,377 euros per year and a net income of 35,286 euros; the excise duties and taxes amount to 46.8 percent. Even if cold progression is completely abolished, wage costs must rise by at least 9.6 percent in order not to lose net purchasing power.

Monika Köppl-Turyna from EcoAustria: “A reduction in payroll taxes would provide more relief to lower incomes. Because they are particularly hard hit.” People with high incomes could more easily bear the loss of purchasing power. According to the NEOS Lab, a reduction in indirect labor costs could create significantly more room for wage poker bargaining.

Measures can curb inflation
For the average employee in the metal industry, a reduction in employer contributions by approximately two percentage points means that net wages can increase by 1.8 percent without increasing operating costs. To bring indirect labor costs closer to the average of industrialized countries, they would have to fall by at least 6.55 percentage points. For this purpose, a reduction in the room tax or unemployment benefit premium was simulated. For an average employee in the metal sector, this means an additional negotiating space of 3,688 euros this year. That corresponds to approximately a 15th month’s salary. That would also reduce inflation by 1.7 percentage points.

Source: Krone


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