Low wages and stagnant growth: Here's why Italians earn less than the rest of Europe.
The OECD's JP Salary Outlook report revealed that in 2023, Italy recorded an average gross annual salary of €44,893 (€3,741 per month) , a 1.8% increase over the previous year. This places Italy in 21st place among the 34 OECD countries analyzed. Iceland tops the list, with an average salary of €79,473, followed by Luxembourg (€78,310) and the United States (€77,463). At the other end of the scale, Greece and Mexico rank among the lowest, with average salaries of €16,600, highlighting the stark disparities.
When discussing average salaries in Italy, it's inevitable to compare them to other European countries . Eurostat data, based on purchasing power, offers a clear picture of wages, helping us better understand salary dynamics in Italy compared to the rest of Europe. The Observatory of the Liberal Professions reports that the average gross annual salary in Europe is approximately €40,000, while the net salary is around €28,000. In Italy, however, the average gross income is approximately €33,000 (€2,750 per month) and the net income is €24,000, below the European average. The countries with the highest salaries are Switzerland, Germany, and Luxembourg, where gross incomes exceed €50,000 , while in Slovakia and Romania, they are among the lowest, with gross incomes of less than €20,000.
In Italy, the tax burden weighs heavily on net wages: 22.1% of gross wages goes to taxes , compared to the European average of 16.6% , placing Italy among the countries with the highest tax burden . Countries like Denmark compensate with lower social security contributions, while in Italy the tax burden significantly reduces purchasing power.
Over the past ten years, wage growth has been slow , averaging 0.9% annually until 2019. After the 2020 crisis, which saw a 4.3% decline, wages recovered in 2021-2022, but in 2023, they increased by only 2.5%, lower than in countries like France and Germany. ISTAT's 2024 Annual Report highlights that wages in Italy have failed to keep pace with inflation in recent years. Between 2021 and 2023, while prices increased by 17.3%, contractual wages grew by only 4.7% . This has reduced the purchasing power of many workers.
Fortunately, towards the end of 2023 and the beginning of 2024, a small reversal of the trend was observed: wages began to grow faster than inflation . Furthermore, the number of employees awaiting contract renewal decreased from 53.6% to 34.9%, signaling an improvement in the employment situation. In short, after years of difficulty, there are positive signs for the future of wages.
In-work poverty in Italy primarily affects those with low wages and precarious contracts, such as fixed-term or part-time contracts, which disproportionately affect women, young people, and foreigners. In 2022, approximately 30% of Italian employees earned a low annual income, with even higher percentages among those on non-standard contracts. Thirty-five percent of Italian families have at least one member with an income below the minimum threshold, increasing the risk of poverty.
Wage stagnation is due to several factors, including inflation, the spread of precarious contracts, and the reduction of permanent contracts . This has had a particularly severe impact on vulnerable groups such as women and young people, widening the wage gap and worsening the economic conditions of many families. In 2024, wages in Italy continue to face numerous challenges. In particular, real wages, i.e., those adjusted for inflation, are still lower than pre-pandemic levels. According to OECD data, in the first quarter of 2024, real wages were 6.9% lower than in 2019. This makes Italy one of the countries with the worst decline among advanced economies.
Despite slow wage growth, the labor market has seen improvements. In May 2024, Italy's unemployment rate fell to 6.8% , marking an improvement from pre-pandemic levels. However, the employment rate remains below the OECD average: 62.1% versus 70.2% .
The difference between the average annual salary in the North and that in the South and on the islands is approximately €3,700 . In 2022, according to data compiled by the CGIA Research Office based on INPS data, blue-collar workers in the North worked an average of 28 more days than their colleagues in the South (253 days versus 225). This difference is mainly due to the greater presence of precarious contracts and seasonal work in the South , especially in the tourism and service sectors. Furthermore, the widespread presence of the underground economy in the South reduces the number of officially counted working days, further impacting wages and working conditions.
The OECD's JP Salary Outlook report highlights that the gender pay gap in Italy remains a significant issue . On average, men earn 7.3% more than women . The gap is most evident among white-collar workers, where it reaches 9.9%. Despite some progress in recent years, gender inequality persists, especially in mid-level positions, suggesting that women continue to face significant obstacles to achieving equal pay, especially in certain sectors and professional roles.
Affari Italiani
