2. Special feature: Impact of COVID-19 on the tax wedge in OECD countries

In 2020, the labour market in OECD countries experienced a heavy shock of a scale and speed not seen in recent memory. With the advent of the COVID-19 health crisis, the unprecedented measures taken to control it, and the resulting economic crisis, labour markets have been rapidly reshaped. Hours worked have decreased, through a combination of higher unemployment, lower labour force participation, and reduced working hours; hiring activity has plummeted; and a significant proportion of workforce has experienced a prolonged period of working from home. Vulnerable groups, such as low-income workers, new entrants to the labour market, workers in non-standard jobs, women and young people, have been disproportionately affected (OECD, 2020[1]). Moreover, in response to the crisis, governments have introduced comprehensive support measures for employers and employees that have further reshaped the job market – notably via the availability and expansion of job retention schemes and wage subsidies – as well as changes to labour taxes and cash benefits.

What then, in this year of change, is considered in the Taxing Wages models and how should the record falls in the OECD average tax wedges seen throughout this year’s publication be understood? This chapter examines some of the drivers of the tax wedge changes in 2020 in the context of the changing labour market in 2020 due to the COVID-19 pandemic. The chapter is structured as follows. The next section considers the interpretation of the Taxing Wages indicators in light of the COVID-19 pandemic, via its impact on the labour market and average wage, as well as countries’ policy responses to the pandemic. The special feature next considers the various tax policy responses adopted by OECD governments in response to the crisis and explains how these were incorporated into the Taxing Wages models. Finally, the special feature examines the drivers of the changes in tax wedges in 2020, by disentangling the role of changes in the average wage and the implementation of specific COVID-19 tax or benefit measures in the decreases in the tax wedge.

In 2020, there were sharp decreases in the tax wedge for all family types relative to 2019, as discussed in chapter 1 of this publication and further illustrated in chapter 3. This chapter focuses on the change in the tax wedge for three family types:

  • The single worker: a single individual with no children, at 100% of the average wage;

  • The one-earner couple: a married couple, with one earner at 100% of the average wage, and two children; and

  • The single parent: a single individual with two children, at 67% of the average wage.

The first two of these family types correspond to the main results discussed in chapter 1. They permit comparisons for two households at the same level of income but with differing household characteristics – notably, the presence of two children. The presence of children in the last two family types illustrates the impact of cash benefits and specific tax advantages for families with children, provided in many OECD countries. Including indicators for the single parent, at a lower income level, also provides insights into the effect of COVID-19 on the tax wedge applying to this more vulnerable family type.

Each of these stylised scenarios in the Taxing Wages models assumes that there is at least one adult working full-time in the private sector on a standard employment contract, with no breaks for sickness or unemployment. For the purposes of the models, the worker is assumed to receive only employment income, which is measured as a percentage of the average wage across the private sector in each country. They are assumed to earn either the average wage – calculated as total payments by employers to full-time employees within a given country, divided by the number of full-time employees – or some percentage of it and may either be married or single, or with or without two children between the ages of six and eleven.

The labour taxes modelled as applying to these workers include personal income taxes, their social security contributions and those of their employer, and cash benefits that apply to all workers based on their financial and family circumstances (i.e. tax provisions or benefits targeted at particular sectors or based on other individual circumstances are not included, and nor are non-standard tax reliefs).

The tax wedge calculated in Taxing Wages shows the combined impact of taxes and social security contributions (SSCs) paid, less cash benefits received, divided by labour costs (gross wage earnings plus employer SSCs). Changes in the tax wedge can therefore result either from a change in the denominator, notably wages, and by changes in any item of the numerator. Further, the amount of personal income taxes and SSCs paid, or cash benefits received, may change either due to changes in tax settings or to the interaction of different wage levels with the progressivity of a country’s tax schedule.

The COVID-19 crisis has impacted the labour market, average wages and tax settings to a more marked extent than in recent years, which impacts how the Taxing Wages results must be interpreted.. In particular, the standard Taxing Wages models do not consider part-time workers, the recently unemployed, or those on an extended period of sick leave. The COVID-19 crisis has led to an increase in benefits and tax provisions that apply only to particular sectors of the economy, or those employed under non-standard arrangements, however, these targeted measures are not considered in the models. And finally, the number of workers who have ceased employment, or moved to part-time employment, was significantly higher in 2020 than in preceding years.

In 2020, a higher share of individuals have become unemployed than in normal years (Figure 2.1), and labour market participation has decreased, to an even greater extent than seen in the global financial crisis (OECD, 2020[2]). These individuals are outside the scope of the tax and benefit provisions included in the Taxing Wages models.1 However, as job losses have been more concentrated at lower wage levels (OECD, 2020[1]), a composition or selection effect can push up the average wage, even when wages of individual workers may not have changed or were small. There is evidence that this indeed had a significant effect in many advanced economies in 2020 (ILO, 2020[3]) (Cajner et al., 2020[4]; Crust, Daly and Hobijn, 2020[5]). Selection effects would also occur when those workers who have moved to part-time or non-standard work are concentrated at the lower-end of the earnings distribution (Gardiner and Slaughter, 2020[6]).2

A second unprecedented change in 2020 is the widespread use of job retention schemes across the majority of OECD countries, which can also affect the calculation of the average wage. There are two primary types of job retention scheme in the OECD. The first is a short-time work scheme, under which an employee works reduced (or in some cases, zero) hours, and is partially compensated for resulting earnings lost by their employer, who in turn is partially reimbursed by the government, or by the government directly. The second type of job retention schemes are wage subsidy schemes, under which the employee’s hours may or may not be reduced, with the government providing a subsidy to the employer in respect of their wage costs. These schemes have the benefit of providing support for businesses and workers affected by the crisis, while minimising employment loss and enabling firms to scale up production after the crisis (OECD, 2020[7]).

The use of job retention schemes, which has been unprecedented in this crisis (Figure 2.2) (OECD, 2020[1]), has reduced the average wages used in some countries in the Taxing Wages calculations. The high use of job retention schemes pushes down the average wage, as employer payments decrease while the number of full-time employees remains more stable (ILO, 2020[3]) (OECD, 2020[1]).3 This has contributed to a fall in the measured average wage in many countries, including in several countries with higher levels of participation in job retention schemes as a share of dependent employees (i.e. wage and salary workers), including in France, Italy, Luxembourg and Switzerland. On the tax side of the equation, the income received by employees participating in the schemes has generally been taxed under the standard tax rules applying to labour income in most countries, although this is not the case in Germany, where income received under a job retention scheme is non-taxable but is added to the gross income in the calculation of the appropriate marginal personal income tax rate (Bundesministerium für Arbeit und Soziales, 2021[8]).

Sickness payments also increased in 2020, and entitlement to these benefits was expanded in many OECD countries (OECD, 2020[1]). When made by the employer to the employee, these are included in the average wage estimates and are implicitly covered in the Taxing Wages models, although any special tax rules applying to sickness payments are not modelled. With the exception of five countries (Australia, Estonia, Latvia, Poland and Slovenia) sickness payments made by the government to employees are not included in the average wage estimates (unless paid via the employer); and in no countries are specific tax provisions in relation to these payments modelled. The Taxing Wages models therefore do not capture any differences between the taxation of sickness benefits and normal labour income. However, as noted in Annex A, the impact of this on the results is likely to be minimal as the payments are typically made for a short period of time and closely correspond to the level of income normally received by the employee.

Finally, the use of teleworking has become widespread in 2020. The impact of teleworking on the average wage is primarily indirect; i.e. those on higher-incomes are typically have a greater ability to telework, and are therefore less likely to lose their jobs or move to part-time or non-standard work, contributing to the composition effect discussed earlier. On the tax side, teleworking may result in a number of changes in tax provisions, which are captured to different degrees in Taxing Wages:

  • In some countries, teleworkers may be able to claim additional deductions for their “home office” or for materials bought to facilitate teleworking (for example, in Ireland, where a portion of broadband costs and other working from home costs are deductible; or in the United Kingdom, where tax reliefs are provided for some household costs (e.g. heating, water, insurance, business calls, broadband or equipment). Germany has also recently implemented a fixed deduction for teleworkers (Finanztip, 2021[9]). These deductions are not included in the Taxing Wages models as they do not meet the assumption of being a standard relief.

  • Commuting deductions that depend on the days worked or on distance travel may or may not continue to apply to teleworkers. These deductions apply, for example, in Belgium and Denmark, which apply a deduction based on kilometres travelled, or Finland and Sweden, where actual costs are deductible. However, they are not included in Taxing Wages because they are also non-standard.

  • However, a number of standard work-related expense deductions are included in the Taxing Wages models. This is the case, for example, in Austria, Germany and Poland, who provide a lump-sum deduction for work-related expenses, including commuting, per employee; and France and Switzerland4, who provide a work-related expense deduction as a percentage of net income, within upper and lower bounds. Within Taxing Wages, the eligibility and the calculation of these deductions is not affected by an employee teleworking, and the models continue to be appropriate.

Thus, the indicators for 2020 capture the tax settings for a private sector worker who has been fortunate enough to retain their job throughout the year on a full-time basis; who may have converted to teleworking through part of the year; who may have been partially inactive under a job retention or wage subsidy scheme; and/or who may have taken a period of employer-paid sick leave. If the worker has teleworked for part of the year, no changes to the tax status that result have been included on the tax side; neither via a reduction in commuting benefits, nor an increase in eligible deductions for work-related expenses. If the worker has been included in a job retention scheme, changes in tax rules for job retention payments (although rare) have also not been taken into account. However, the impact of composition effects on the average wage may have served to artificially increase the wage level for these workers.

In the COVID-19 crisis, governments have introduced a range of measures, both within and beyond the tax system, to support businesses and households:

  • Measures to support businesses have focussed on tax payment deferrals, including deferrals of employer SSCs, and other measures to support cash-flow, as well as a significant expansion of the use and applicability of job retention schemes and other forms of employment support (OECD, 2020[10]).

  • Governments have also introduced significant support for households affected by the health and economic consequences of the COVID-19 crisis. Many countries have provided targeted support for households working in sectors particularly affected by the pandemic or those who have recently become unemployed, as well as expanding sick leave and unemployment payment entitlements. Support for households’ cash flow has also been offered in many OECD countries; this has largely been provided through direct transfers, rather than through the tax system, although the choice between the two depends on the architecture of countries’ tax systems (OECD, 2020[10]). Deferrals of tax payments, although rarer than for businesses, have also been implemented for individual taxpayers in some countries, along with extended tax filing deadlines, flexible payment plans, and accelerated tax refunds.

The Taxing Wages models for 2020 include the support measures for businesses and households that are consistent with the general Taxing Wages assumptions, as detailed in the introduction of chapter 1 and in Annex A. Therefore, the support measures included in the Taxing Wages models for 2020 (the modelled support measures) are those which:

  • apply to labour income (including changes to the rates, thresholds, allowances or credits allowable under personal income taxes, social security contributions (employee or employer) and cash benefits);

  • apply to the majority of full-time workers in sectors B to N in ISIC rev 4 (i.e. sector-specific or other targeted measures are not included);

  • do not vary based on taxpayer circumstances other than income level and family status, as in the case of a universal cash benefit or a standard tax relief (i.e. non-standard tax reliefs, or benefits applying based on employment status are not included); and

  • represent a variation in the taxpayer’s liabilities for the 2020 year, rather than a timing difference (i.e. deferrals of tax liabilities are not included; whereas temporary measures and one-off payments are).

For this edition of Taxing Wages, countries were asked to provide a short summary on the broader labour tax measures implemented in response to the COVID-19 pandemic, which are included in the country chapters in Part II. Table 2.2 provides an overview of the tax and benefit measures implemented in response to the COVID-19 crisis within sectors B-N, differentiating between provisions that are included in the Taxing Wages models, and those that are not included for one of the following reasons: (i) because they applied to less than the majority of private sector workers; (ii) because they were not standard; or (iii) because they amounted to a deferral rather than the reduction or removal of a tax liability.

In total, specific tax and benefit provisions in response to COVID-19 were modelled for ten countries. These largely related to one-off payments or increases in cash benefit provisions (Australia, Austria, Canada, Iceland, Korea, Lithuania, the United States), particularly for families with children; and increases in tax reliefs under personal income taxes (Germany, Lithuania, the United Kingdom). In addition, Austria made a change to its marginal tax rate schedule, and Hungary reduced its employer SSC rate. A summary of these measures is shown in Table 2.2.

The remainder of the special feature considers the impact of these measures on the tax wedge for the single parent, single worker, and one-earner couple in these countries, as well as the OECD average. It is important to note that many countries provided significant support to households and businesses that is not modelled in Taxing Wages, either because the support was targeted in nature or lay outside the labour tax system. The discussion that follows therefore aims only to identify the impact of the labour tax-specific measures modelled in Taxing Wages on the tax wedge of the three family types. It does not constitute even a partial assessment of the total impact of COVID-19 support measures in the OECD.

In 2020, the tax wedge decreased for all three family types relative to 2019 (Figure 2.3): by 0.4 percentage points (p.p.) for the single worker, 1.1 p.p. for the one-earner couple and 1.6 p.p. for the single parent. These falls bring the average for each family type to its lowest level since 2000; exceeding the lows in 2009 following the global financial crisis for the one-earner couple and the single parent, and equivalent to the 2009 average tax wedge for the single worker.

This section considers the drivers of the changes in the OECD and country tax wedges in 2020, exploring the impact of changes in the average wage and of specific COVID-19 tax or benefit provisions.

As outlined in chapter 1, the annual nominal change in the average wage varied between -13.3% in Colombia to 20.9% in Turkey (Table 1.7), with an average change of 0.6%. Sixteen OECD countries had falls in the nominal average wage in 2020 relative to 2019, a level not previously seen in the period covered by Taxing Wages (Figure 2.4) and all the more striking in the presence of the composition effects noted earlier in this chapter. Even among the 21 countries that had higher nominal wages in 2020 relative to 2019, the increase was less than 4% in all but four countries. The average wage estimates for 2020 have been produced using the percentage changes in compensation per employee from the OECD Economic Outlook Volume 2020, issue 2.

The interaction between the progressivity of country tax systems and lower average wages could result in a decrease in the tax wedge in these countries and for the OECD as a whole, depending on the degree of progressivity and the scale of other policy changes. To examine the impact of wage changes on the indicators, Table 2.3 summarises the correlation between changes in the nominal average wage and the change in the average tax wedge across the OECD in 2020, relative to 2019. This table demonstrates that:

  • Of the 16 countries that had a fall in the nominal average wage in 2020, almost all also saw a decrease in the tax wedge, regardless of household type, with one exception for the single parent (an increase in Japan) and two for the single worker (an increase in Korea, and no change in Colombia).

  • Of the 21 countries that saw a rise in the nominal average wage in 2020, approximately one-third also experienced an increase in the tax wedge, whereas two-thirds saw a decrease in the tax wedge, regardless of the family type considered.5

  • For both the single parent and the one-earner couple, the average tax wedge decrease in countries where the average wage rose (2.8 p.p. and 2.1 p.p., respectively) was greater than the tax wedge decrease in countries in which the average wage fell (1.9 p.p. and 0.9 p.p., respectively);

  • For the single worker, the average decrease in the tax wedge was not markedly different for countries in which the average wage fell (0.6. p.p.) than it was for countries in which the average wage rose (0.5 p.p.).

Table 2.3 suggests that the decreases in the OECD average tax wedge for each family type were not due to the unprecedented number of falls in countries’ average wages in 2020.

To further explore the impact of the changes in nominal wages in 2020 on country tax wedges, the tax wedge in each country was calculated for a zero-wage change (ZWC) scenario, i.e. at the level of 2019 average wages, using the tax rules applicable in 2020 (Figure 2.5). The difference between the ZWC scenario and the tax wedges for 2019 and 2020 highlights the impact of changes to the average wage on the results:

  • Impact of 2020 wage change: calculated as the tax wedge in 2020 less the tax wedge under the ZWC scenario, this shows the impact of wage change on the tax wedge in each country (either due to different tax provisions applying at the new wage level);

  • Change in the tax wedge under the ZWC scenario: calculated as the tax wedge under the ZWC scenario less the tax wedge in 2019, this shows the impact of policy changes between 2019 and 2020 on the tax wedge in the absence of changes to the average wage.

The impact of the average wage on the tax wedge differed depending on whether it rose or fell. As indicated in Table 2.3, only one of the 16 countries with a fall in the average wage saw an increase in the tax wedge for the single parent (Japan) and the single worker (Korea). In both cases, the increase in the tax wedge was driven by policy changes. In Japan, a lower income-tested single parent benefit (the Child Rearing Allowance) was paid in 2020 compared to 2019, due to an increased withdrawal rate; whereas in Korea, there were increases in the health and unemployment contribution rates. In the remaining countries where the average wage fell, policy changes were the predominant factor in the decrease in the tax wedge only in the Czech Republic and Korea (single parent and one-earner couple), Belgium (single parent only), Italy (single worker and one-earner couple) and Greece and Finland (all family types). The falls in the average wage were the predominant factor in the remaining decreases in the tax wedge in these 16 countries.

In the 21 countries where average wages rose, policy changes consistently acted to reduce the change in the tax wedge. The overall change in the tax wedge was therefore determined by the degree to which these policy changes were offset by wages growth. In approximately two-thirds of these countries, the impact of policy changes in reducing the tax wedge dwarfed the impact of the wage rise in increasing it, resulting in a decreasing tax wedge (as seen in Table 2.3) for 13 countries for the single parent; 15 for the single worker, and 14 for the one-earner couple. Notably, many of the largest decreases in the tax wedge, particularly for the single parent, are seen in countries where wages increased but COVID-19 measures applied (shown in Figure 2.5 by an asterix after each country name). The impact of these changes is discussed further in the next section.

Both Table 2.3 and Figure 2.5 confirm that the wide falls in nominal average wages across the OECD were not the primary cause of the decrease in the OECD average. The contrary is true: decreasing tax wedges were primarily caused by changes in tax policy settings, which (except in a very small number of cases) resulted in a negative impact on the tax wedge, regardless of whether average wages rose or fell. While most of the increases in tax wedges were due to wage rises (and resulting higher income taxes via the progressivity of income tax systems), many of the countries in which wages rose still saw decreases in the tax wedge for all family types, as the decrease due to policy changes more than offset the impact of higher wages. For the OECD average, policy changes led to a reduction in the tax wedge change for all three family types, offset slightly by the impact of changes to countries’ average wages (see also Table 2.5). In short, the OECD average tax wedge in 2020 would have been slightly lower even if none of the changes to average wages at the country level had occurred.

The analysis of the ZWC scenario highlights that decreases in the tax wedge in 2020 were due to changes in tax policy settings rather than to wage changes. This section examines to what extent COVID-19 specific provisions affected country tax wedges and the OECD averages. As detailed above, only those provisions that meet the standard Taxing Wages assumptions are included in the analysis, and so this chapter does not attempt to measure the full impact of COVID-19 support on households, but rather to assess the impact of these specific measures on the Taxing Wages results.

In 2020, ten OECD countries introduced support measures that met the Taxing Wages assumptions and were included in the models. These are summarised in Table 2.2. To assess the impact of these on the change in tax wedge for the three family types, Table 2.4 presents the change in the tax wedge in these countries with these measures included (i.e. the standard Taxing Wages results) as well as with these measures removed from the models (the No-COVID scenario, (NCV)).

The scale of the COVID-19 support measures included in the models were biggest for the single parent in every country except the United States (where the one-earner couple experienced the biggest decrease) as well as on average (a decrease of 2.7 p.p. for the single parent, 1.7 p.p. for the one-earner couple and 0.3 for the single worker). The measures in all ten countries applied to the single parent and in nine to the one-earner couple; compared to only four countries where they reached the single worker. This was largely due to most changes being delivered to support families with children via targeted child benefits (for example, in Austria, Canada, Germany, Iceland, Korea, Lithuania and the United States. See Table 2.2 for a summary of these measures). As noted in chapter 1 and in the special feature of Taxing Wages 2019, this reflects the prevalence of support measures in OECD countries for families with children.

Almost all of the ten countries in Table 2.4 saw a rise in the average wage, excluding Korea, which may have partially been a result of the composition effects discussed earlier. Nonetheless, most had decreases in the tax wedge for all family types between 2019 and 2020, with the exceptions of Australia (all family types); Hungary (the single parent) and Korea (the single worker). Without the COVID changes, increases in the tax wedge would also have been observed in Austria and the United States (all family types); Canada (single parent and one-earner couple) and Hungary (one-earner couple). All other cases would have seen a decrease in the tax wedge (but of a lesser magnitude) even without the COVID-19 measures.

Similarly, if the COVID-19 measures had not been implemented in these ten countries, the OECD average tax wedge would have still decreased for all three family types in 2020 (although only very marginally, by 0.1 p.p., in the case of the single worker), albeit to a lesser degree than the decreases recorded inclusive of these measures. The impact of the COVID-19 support measures in these ten countries accounted for two-fifths of the overall decrease in the OECD average tax wedge for the single parent and the one-earner couple, and one-fifth of the decrease for the single worker.

Finally, as shown in Figure 2.6, the COVID-19 support measures were predominantly composed of increases in cash benefits. Lower income tax rates played a role in several countries; employee SSCs did not change in any, and employer SSCs played a role only in Hungary, where the employer SSC rate was lowered by 2 p.p. in response to the COVID-19 crisis, as described above.

Table 2.5 summarises the impact of wage changes, as well as COVID-19 measures, on the change in the OECD average tax wedge for all three family types.

In 2020, significant reductions in the tax wedge are seen for the single parent, single worker, and one-earner couple, to the lowest levels since Taxing Wages began in 2000. These falls occurred in the context of COVID-19’s impact on the labour market and widespread falls in nominal average wages, as well as in the presence of support measures for businesses and households implemented via the tax system or through direct support.

By disentangling the impact of wage changes and the COVID-19 support measures that are included in the Taxing Wages models, this chapter demonstrates that the falls in the OECD average were not primarily due to the widespread decline in the average wage across OECD countries. Rather, changes in tax policy settings acted to reduce the tax wedge in almost all countries and were the predominant factor in the tax wedge decreases in countries where wages rose. By contrast, increases in the tax wedge were almost all driven by rising wages, offset slightly by policy change. On average, in the absence of the wage changes seen in 2020, the OECD average would have decreased by between 0.0 and 0.2 p.p. more for the three family types.

Across the OECD, countries have largely chosen to provide support to households and businesses outside the labour tax system. While the Taxing Wages models are unable to take account of many of these changes, the results presented in this special feature do include direct measures implemented through the system to address COVID-19 for ten countries. These countries have largely delivered support through the provision of enhanced or one-off cash benefits, with a focus on supporting families with children. Only a few countries have introduced measures to change the structure of their personal income taxes or SSCs in direct response to the COVID-19 pandemic, and consequently, the impact of COVID-19 support measures is primarily in reducing the tax wedge for families with children rather than the single worker. Taken together, the impact of these COVID-19 measures is smaller than other policy changes; accounting for roughly two-fifths of the decrease between 2019 and 2020 for the single parent and the one-earner couple, and one-fifth for the single worker.

Countries may yet choose to introduce further measures that more directly affect the structure of labour taxation as part of the post-crisis recovery, whether to address their longer-term goals in addressing structural inequalities, promoting economic growth, or improving fiscal sustainability. Future editions of Taxing Wages will monitor the impact of these changes on the taxation of the labour incomes of different family types, together with further changes in the labour market that may affect the results.


[8] Bundesministerium für Arbeit und Soziales (2021), Antworten zu Kurzarbeit und Qualifizierung, https://www.bmas.de/DE/Corona/Fragen-und-Antworten/Fragen-und-Antworten-KUG/faq-kug-kurzarbeit-und-qualifizierung.html#docd06882b7-5b55-4a9b-9268-fc69590b54f3bodyText6 (accessed on 17 February 2021).

[4] Cajner, T. et al. (2020), “The U.S. labor market during the beginning of the pandemic recession”, Brookings Papers of Economic Activity, https://www.brookings.edu/wp-content/uploads/2020/06/Cajner-et-al-Conference-Draft.pdf (accessed on 26 January 2021).

[5] Crust, E., M. Daly and B. Hobijn (2020), The Illusion of Wage Growth, Economic Letter, Federal Reserve Bank of San Francisco, https://www.frbsf.org/economic-research/publications/economic-letter/2020/august/illusion-of-wage-growth/ (accessed on 26 January 2021).

[11] Deloitte (2020), What impact will remote work have on employees’ 2020 tax return deductions?, https://www.taxathand.com/article/15820/Switzerland/2020/What-impact-will-remote-work-have-on-employees-2020-tax-return-deductions (accessed on 17 February 2021).

[9] Finanztip (2021), 30 Cent pro Kilometer für den Weg zur Arbeit, https://www.finanztip.de/entfernungspauschale/ (accessed on 17 February 2021).

[6] Gardiner, L. and H. Slaughter (2020), The effects of the coronavirus crisis on workers, Resolution Foundation, https://www.resolutionfoundation.org/publications/the-effects-of-the-coronavirus-crisis-on-workers/ (accessed on 26 January 2021).

[3] ILO (2020), Global Wage Report 2020-2021: Wages and Minimum Wages in the time of COVID-19, International Labour Office, Geneva, https://www.ilo.org/wcmsp5/groups/public/---dgreports/---dcomm/---publ/documents/publication/wcms_762534.pdf (accessed on 17 February 2021).

[7] OECD (2020), Job retention schemes during the COVID-19 lockdown and beyond, http://www.oecd.org/coronavirus/policy-responses/job-retention-schemes-during-the-covid-19-lockdown-and-beyond-0853ba1d/ (accessed on 14 February 2021).

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[10] OECD (2020), Tax Policy Reforms 2020: OECD and Selected Partner Economies | en | OECD | OCDE, OECD Publishing, Paris, http://www.oecd.org/fr/ctp/tax-policy-reforms-26173433.htm (accessed on 12 February 2021).


← 1. Out of work benefits are taken into account in the Tax and Benefit models, available here: https://www.oecd.org/social/benefits-and-wages/.

← 2. In addition, four OECD countries (Chile, Ireland, Slovak Republic and Turkey) are not able to exclude part-time wages, nor to convert them into full-time equivalents, for the purposes of calculating the average wage (see Annex A for more information). Therefore, the impact of higher than usual part-time work will be to reduce the average wage in these countries.

← 3. This is not the case in the United States, where employees under job retention schemes are not included as full-time employees in the calculation of the average wage (OECD, 2020[2]). See also the OECD’s Labour Force Statistics guidelines for more information on the definition of short-time work in each country (OECD, 2020[12]). Moreover, wage subsidy schemes (as in Australia, Canada, Ireland, the Netherlands and New Zealand), which do not necessarily entail a fall in the hours worked by employees benefiting from the scheme, are less likely to put downward pressure on average wages.

← 4. The information for Switzerland relates to the Canton of Zurich, which is used as the representative region in Taxing Wages. Other cantons have different work-related deductions, some of which may be withdrawn in the case of telework (Deloitte, 2020[11]).

← 5. All of the increases in this group of countries for the single worker were due to higher income taxes. See chapter 1 for further information.

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