Low-wage Employment and Social Security Contributions

In 2010, 15.1 percent of employees (excluding employees in the public sector) in Austria were low-wage earners; the European average was 17 percent. Administrative income data for Austria show that 32 percent of women and 9 percent of men with full-time jobs were low-wage earners. Since the Austrian compulsory social security contributions are relatively high and strongly contribute to the burden of low-wage employees, we modelled a reform that lowers the social security contributions for monthly gross earnings up to 1,500 €. Owing to the specific features of the reform, particularly part-time employees would benefit from these measures. The disposable income of the households is shown to increase by € 290 million.