by Guisela Chiarella
Italy ranks last among major Western economies in net average wages when adjusted for purchasing power, according to a recent analysis of 2023 data. The study, which compares net salaries using the Purchasing Power Standard (PPS), highlights Italy’s lagging position behind France, Germany, and even Spain.
The findings reveal that a single Italian worker without children earns an average of approximately 24,000 PPS per year, significantly below the European Union average of 27,500 PPS—a gap of roughly 15%.
Switzerland tops the rankings with net wages exceeding 47,000 PPS, followed by the Netherlands, Norway, Luxembourg, Austria, and Germany. In particular, Germany’s average net wage stands at nearly 35,000 PPS, a striking 45% higher than Italy’s, while the French average surpasses Italy’s by 18% and Spain edges ahead by 2%.
The Tax Burden and Wage Structure Challenges
Experts attribute Italy’s low purchasing power to a combination of complex tax policies and rigid wage structures. The country’s tax system has long been criticized for inefficiencies, with overlapping bonuses and deductions that, in some cases, result in net earnings decreasing when gross salaries increase.
Additionally, workers earning over €40,000 gross annually (approximately €2,100 net per month) have largely been excluded from meaningful tax relief measures. This has contributed to stagnating purchasing power, making it difficult for salaries to keep pace with inflation and cost-of-living increases.
A Long-Term Decline in Real Wages
Italy is the only European Union country where real wages have declined since 1990, according to OECD data. The issue has worsened in recent years, with real wages plummeting 7.3% in 2022 alone due to inflation outpacing salary adjustments.
This stands in stark contrast to other European nations, where real wages have generally increased over the past three decades. The persistent decline in Italy underscores deeper structural issues within the country’s labor market and economic policies.
Root Causes and Potential Solutions
The stagnation of Italian wages stems from multiple factors:
- Low productivity growth: A key barrier to wage increases.
- Small and medium-sized enterprises (SMEs): The backbone of Italy’s economy, but often financially constrained when it comes to raising wages.
- High labor taxes: Reducing workers’ take-home pay and discouraging salary increases.
To address these issues, economists suggest a multifaceted approach, including targeted tax reforms, measures to boost productivity, and policies designed to strengthen workers’ purchasing power while maintaining economic sustainability for businesses.
Without decisive structural changes, Italy risks falling further behind its European peers, with long-term implications for its economy and workforce.
