Spanish companies rank sixth in the world in labor costs

Brazil and Europe hit employers hard with higher labor costs.

\r

---

\r

According to a new study conducted by UHY, an international auditing and consulting network present in 81 countries, Spanish companies They face one of the costes, for social security and taxes for hiring a worker, which are higher worldwide.

\r

UHY International conducted the study using data from 25 countries where its international network operates , including the G7 member countries and the BRIC emerging economies . To carry out the study, UHY professionals calculated the contributions a company must make, such as social security contributions, based on the gross salary paid per employee.

\r

UHY concludes from its study that the average employer in Spain has to pay approximately €7.700 extra on top of a €23.000 salary (33.47% of gross salary) in various labor costs such as social security . These figures place Spain as the sixth country with the highest labor costs for employers per employee, compared to a European average of €6.200 (26.95%).

\r

Joseph Fay, Managing Partner of UHY Fay & Co in Spain , comments: “With real unemployment of 5.6 million people, which represents an unemployment rate of 26%, Spain cannot continue to ignore a basic economic reality: high labor costs and low unemployment do not go together.”

\r

Fay adds: “Many of the social security structures that remain today were built decades ago, and the principles on which they were created have not been reviewed since. It could be argued that, as a result, labor costs have grown unchecked.”

\r

“The countries that consistently have the lowest labor costs are the US, Denmark, India, and Canada.”

\r

UHY adds that seven of the ten countries with the highest labor costs for low- and middle-wage workers are European. The average cost a European employer must pay on the gross salary of an employee earning €57.700 is €13.700 (23.74%), while in the United States it is €4.800 (8.31%) and in Canada €4.000 (6.93%).

\r

On the other hand, UHY notes that the average labor costs in G7 countries are €5.587 on a gross salary of €23.000 (24.29% of gross salary) and €47.000 on a gross salary of €231.000 (20.35%). In BRIC countries , the costs are €6.500 (28.26%) on a salary of €23.000 and €43.500 (18.83%) on a salary of €231.000, respectively.

\r

UHY adds that there are significant differences in per-employee costs for companies in Europe.

\r

Employers in Italy – the European country with the highest labor costs – have to pay €12.000 on the salary of an employee with a gross salary of €23.000 (52.17%). In Denmark , employers only pay €1.300 (5.65%).

\r

Fay comments: “Countries like the UK, Germany, Ireland , and Denmark have a clear competitive advantage because their labor costs are much lower than anywhere else in the Single Market . It is much cheaper to open a business and hire staff in these countries than anywhere else in Europe .”

\r

“Therefore, it is no surprise that, even after the impact of the recession, Denmark, with its low employment costs, has strikingly lower unemployment rates (6%) than Spain , whose high employment costs contribute to that enormous 26% unemployment rate.”

\r

Eric Waidergorn, Director of UHY Moreira and a member of UHY in Brazil, comments: “Employment costs in Brazil are exceptionally high, which will hinder the development of new businesses and job creation. Direct taxes on individuals in Brazil are low compared to developed and BRIC countries , but high labor costs will be an impediment to the country's economic development.”