Driving a wedge

Governments in rich countries are pushing up the cost of hiring despite possible alternatives for raising revenue not being in short supply. In December 2025 Rainer Kirchdörfer, chairman of Germany’s Foundation for Family Businesses , published the Stiftung’s annual monitor, a survey of 1,700 family-owned firms run by the Ifo Institute. More than 80 per cent of respondents said their employees were “heavily” or “very heavily” burdened by taxes.

Kirchdörfer’s verdict was more severe. He said that high labour taxes “paralyse both sides and rob them of the joy of achievement”. Four months later the Organisation for Economic Co-operation and Development (OECD), a club of mostly rich countries, published Taxing Wages 2026 , and it became clearer why he was so cross. The report, released on April 22, contained the worst numbers since 2016. Across the OECD’s 38 member states, the average tax wedge on a single worker earning the average wage reached 35.1 per cent of total labour costs in 2025. It rose in 24 countries and fell in only 11. Effective rates climbed across all eight household types the report examines, the first time that had happened since Covid-19 pandemic-era stimulus was unwound in 2022. Belgium topped the rankings at 52.5 per cent. Germany sat on 49.3, France on 47.2, Austria on 47.1 and Italy on 45.8. Colombia at zero and Chile at 7.2 anchored the other end. For a Brussels factory owner paying an average-wage assembly worker, very nearly half of every euro spent ended up with the Belgian state rather than the employee. Take-home pay did grow in most places.

Key points

• Kirchdörfer’s verdict was more severe.
• He said that high labour taxes “paralyse both sides and rob them of the joy of achievement”.
• Four months later the Organisation for Economic Co-operation and Development (OECD), a club of mostly rich countries, published Taxing Wages 2026 , and it became clearer why he was so cross.
• The report, released on April 22, contained the worst numbers since 2016.
• Across the OECD’s 38 member states, the average tax wedge on a single worker earning the average wage reached 35.1 per cent of total labour costs in 2025.