[pieno]

I’d take this one step further: the whole system in Europe is designed to keep everyone at “average” wages across the board.

Due to the (extremely steep) progressive tax system, there’s a lot of friction in (serious) pay raises. Why give someone a raise of €1,000/month when at the end of the day they will end up with less than half that?

Or why would you keep working full-time if by working 4 days you only give up 10% of net pay? Your ‘hourly wage’ actually goes up.

And it doesn’t stop with progressive taxation: a huge number of expenses are income-linked. So with your net pay increase of €500/month, you also start paying a lot more for child care or loose other benefits.

Instead, you could start working 4 out of 5 days: 1 day less to pay for childcare, and the cost per day of the remaining 4 days also goes down because your pre-tax income went down by 20% (all while net income only reduced by 10%)).

So in the end I don’t think people are getting paid less in Europe simply because taxes are higher or because there are more general benefits, but rather because there are actual systemic incentives to getting paid less. And I think this really affects typical upper-average income, where realistic incremental pay raises just aren’t really worth it for a lot of people. There’s a hurdle to reach a much higher level of income (let’s say top 10% bracket) where the increase in expenses and loss of benefits becomes insignificant (or you’ve already reached maximum levels of income-linked expenses) compared to the massively higher income level.