Every payslip comparison on this site measures what comes out of the employee's gross salary. There is a second, frequently larger, set of charges that never appears there at all: what the employer pays on top.
Economists generally treat these as borne by the worker in the long run, on the reasonable argument that an employer decides what an employee is worth in total and then splits the number according to whatever the local rules require. Whether or not that holds precisely, the practical effect is clear enough. Countries that charge heavily on the employer side can afford to charge lightly on the employee side, and their payslips look better than their tax burden is.
What it costs to employ someone on 60,000 euros
Approximations. Employer rates vary by sector, headcount, region, accident risk category and salary band in most of these countries, and several apply reductions on lower pay.
The Nordic split that explains everything
Denmark and Sweden run comparably sized welfare states and fund them from opposite ends of the payslip.
Sweden collects 31.42% from the employer, an arbetsgivaravgift covering pensions, health insurance, parental insurance and unemployment. The employee's own deduction is essentially income tax alone, which is why Swedish take-home looks unexpectedly reasonable for a country with that reputation, as Sweden's 52% headline sets out.
Denmark collects almost nothing from the employer. Everything runs through the employee's payslip: the 8% labour market contribution, municipal tax, bottom bracket tax and, above the threshold, top bracket tax. Danish deduction rates look brutal and Danish employer costs are among the lowest in Europe. The full structure is in Denmark's tax burden.
Comparing Danish and Swedish net pay without accounting for this produces a nonsense answer. Comparing the total cost of employment produces a sensible one, and the two countries then sit far closer together than any payslip suggests.
Where the employer contribution is genuinely yours
Three of the systems here treat the employer payment as an identifiable asset with your name on it rather than a general levy.
- Australia. Superannuation at 12% goes into a fund you choose, you can see the balance, and it is inherited if you die. It is deferred pay in the clearest possible sense, as the superannuation guide explains.
- Switzerland. Second pillar occupational pension contributions are split between employer and employee, and the accumulated capital is portable between employers and partially withdrawable for a first home.
- Netherlands. Sector pension funds are largely employer-funded and produce a genuine individual entitlement, though it is a collective scheme rather than an account.
Everywhere else, the employer contribution buys a claim on a pay-as-you-go system rather than a balance, which is a legitimate thing to buy but not the same thing at all.
Why it matters when you are negotiating
Three practical consequences.
Recruiters in some markets quote employer cost, not salary. This is common in parts of central and eastern Europe and in much of Latin America. A quoted figure that seems 25% too good usually is.
Contractor rates need the gap added back. Moving from employment to contracting means absorbing the employer contribution yourself. A day rate that merely matches the employee's gross salary divided by working days is a substantial pay cut, and in France or Italy it is a very large one.
Employers price the total. A request for a 5,000 euro raise costs a French employer 7,000 and an Irish employer 5,558. That asymmetry is invisible from the employee's side and entirely visible from the other, and it is worth knowing which conversation you are in.
The American exception
United States employer contributions look low at 7.65% plus unemployment insurance, and the figure is misleading. Employer-sponsored health insurance is not a statutory contribution and is a very large real cost, frequently exceeding $15,000 a year for family cover, most of which the employer pays.
Add it and American employer costs land in the middle of the European range rather than at the bottom. The difference is that it buys a private insurance policy tied to the job rather than a public entitlement tied to the person, which is why the numbers in what $100,000 leaves after tax are so hard to compare directly with European ones.
Related: Gross vs net salary explained