In 2022, compensation of employees was the largest income component in the European Union (EU), accounting for 47.0 % and 47.8 % of GDP in the EU and the euro area, respectively. It decreased by -0.7 percentage points (pp) for the EU in comparison with 2021 and by -0.6 pp for the euro area with shares lower than in 2019, the last year before the outbreak of the COVID-19 pandemic. Taxes on production and imports (less subsidies) increased by +0.4pp and +0.5pp respectively compared to 2021 and accounted for 11.2 % in the EU and 10.8 % in the euro area in 2022. Finally, gross operating surplus and mixed income accounted for 41.9 % of GDP for the EU and 41.4 % for the euro area, increasing by +0.4pp in the EU and by +0.1pp in the euro area in comparison with 2021.
Source: Eurostat (nama_10_gdp)
Table 1 shows the income components as a proportion of GDP in the EU and the euro area as well as for the Member States in 2021 and 2022. The share of the income components varied significantly across the EU (see Figure 1). Compensation of employees is made up of two components : ‘wages and salaries’ and ‘employers’ social contributions’.
Compensation of employees
Ten Member States recorded a higher share of GDP than the EU average for compensation of employees. In Germany (52.4 %), France (52.2 %), Slovenia (49.9 %), Luxembourg (49.2%) and Denmark (49.1 %), this component accounted for about half the value of GDP. Seventeen Member States recorded a share of GDP that was equal or below the EU average for compensation of employees, with the lowest proportions in Ireland (24.6 %), Greece (35.2 %) and Romania (34.9 %).
Wages and salaries
Twelve Member States recorded a higher share of GDP than the EU average for wages and salaries with Denmark (45.2 %) and Lithuania (45.0 %), accounting for 45 % and over of GDP. The lowest proportions were recorded in Ireland (20.6 %), Greece (27.3 %) and Italy (29.9 %).
Employers’ social contributions
Nine Member States recorded a higher share of GDP than the EU average for this component with the highest proportions being observed in France (12.9 %), Belgium (12.3 %) and Estonia (11.9 %). Six countries reported an employers’ social contribution of less than 5 % of GDP: Lithuania and Romania (both 1.6 %), Malta (3.2 %), Denmark (3.9 %) Ireland (4.0 %) and Hungary (4.1 %).
Taxes on production and imports (less subsidies)
Thirteen Member States recorded a higher share of GDP than the EU average for this component, with the largest values observed in Sweden (19.8 %), Croatia (16.4 %) and Hungary (15.3 %). Ireland (5.5 %) and Malta (5.6 %) recorded shares of less than 6 % of GDP.
Gross operating surplus and mixed income
Sixteen Member States recorded a higher share of GDP than the EU average for gross operating surplus and mixed income. In Ireland (69.6 %), Romania (56.1 %), Greece (51.8 %) and Malta (50.0 %), this component accounted for over half the value of GDP, while the lowest proportions were observed in France (34.3 %), Sweden (34.3 %) and Denmark (37.8 %)
Changes over the last 20 years
Table 1 presents also the changes to each of the income components by Member State and the EU between 2002 and 2022.
The evolution of the shares of compensation of employees and corporate profits and mixed income over the last 20 years shows the clear impacts of the economic and financial crisis and of the COVID-19 pandemic in 2020. Between 2000 and 2007, a trend is observed of decreasing compensation of employees and increasing profit shares in relation to rather high increases of GDP. Then, the share of compensation of employees remained relatively resilient during the crisis, when GDP (chain linked volumes) decreased by 4.3 % in 2009 as profits took the biggest hits. After the crisis, trends remained relatively stable until 2019. With the COVID-19 pandemic in 2020, shares had moved to the benefit of gross operating surplus and mixed income and compensation of employees and at expense of taxes on production and imports (less subsidies). Since 2021, the share of compensation of employees has been decreasing steadily unlike the share of gross operating surplus and mixed income. See Figure 2.
Source: Eurostat (nama_10_gdp)
Compensation of employees
The share of compensation of employees had a decreasing trend between 2000 and 2007 then increased significantly in 2008-2009 during the economic crisis and decreased back to its early 2000 share. In 2020, this share increased during the COVID-19 pandemic but started decreasing steadily since 2021. In 2022, this share is even lower than in 2019. As a result, over the last 20 years, this share decreased in the EU (-0.3pp) but slightly increased in the euro area (+0.1pp). Significant changes were noted across the Member States. The largest increases in the shares of GDP for compensation of employees over the last 20 years were observed in Bulgaria (from 34.5 % in 2002 to 44.2 % in 2022 or +9.7 percentage points (pp)), Latvia (+8.5pp) and Lithuania (+8.3pp), while Ireland recorded the largest decrease (from 36.9 % in 2002 to 24.6 % in 2022, or -12.3pp). See Figure 3.
Source: Eurostat (nama_10_gdp)
Wages and salaries
The share of wages and salaries has slightly risen in the EU over the last 20 years, (from 37.0 % in 2002 to 37.3 % in 2022, or +0.3pp) with the same trends as compensation of employees. However, this share is lower in 2022 than it was in 2019. For 15 Member States the share of this income component to GDP has increased between 2002 and 2022, with the most notable increases observed in Lithuania (from 30.5 % in 2002 to 45.0 % in 2022, +14.5pp), Bulgaria (+10.6pp) and Latvia (+7.2pp). Significant decreases in the share of this component were recorded in Ireland (from 31.4% in 2002 to 20.6 % in 2022, or -10.8pp), Croatia (-2.9pp) and the Netherlands (-2.5pp). See Figure 4.
Source: Eurostat (nama_10_gdp)
Employers’ social contributions
The share of employers’ social contributions has slightly decreased in the EU over the last 20 years (-0.7pp). This share has the same trends as compensation of employees except for the period 2017-2019 when a decrease is observed. For 13 Member States the share of this income component to GDP has increased. The most notable increases were observed in Cyprus (from 6.5 % in 2002 to 8.2 % in 2022, or +1.7pp), Estonia and Slovakia (both +1.3pp). Significant decreases in the share of this component were recorded in Hungary (from 10.5 % in 2002 to 4.1 % in 2022, or -6.4pp), Lithuania (-6.2pp) and Romania (-5.2pp). See Figure 5.
Source: Eurostat (nama_10_gdp)
Taxes on production and imports (less subsidies)
Over the past 20 years, the share of taxes on production and imports (less subsidies) increased except in 2008-2009 with the economic crisis and decreased again in 2020 with the COVID-19 pandemic. In 2022, despite the steady increase, it still remained below its pre-pandemic level. As a result, over the last 20 years, this share slightly decreased (-0.2pp) in the EU. Sixteen countries recorded a decrease in this share with the most significant decreases observed for Malta (-5.1pp), Ireland (-4.1pp) and Slovenia (-2.6pp). In nine Member States, the share of this income component to GDP has slightly increased over the same period with the most notable increases observed in Hungary (+2.1pp) and Greece (+1.9pp) and Portugal (+1.4pp). See Figure 6.
Source: Eurostat (nama_10_gdp)
Gross operation surplus and mixed income
The share of gross operating surplus and mixed income increased steadily between 2000 and 2007 and took the biggest hits of the financial crisis in 2008-2009. Since 2016, this share slightly decreased until 2019 but increased surprisingly since 2020. As a result, over the last 20 years, this share slightly increased in the EU (+0.6pp) but stayed constant in the euro area. The largest increases in the share of GDP to gross operating surplus and mixed income were observed in Ireland (from 51.9 % in 2002 to 69.6 % in 2022, or +17.7pp), Belgium and Romania (both +5.7pp), while the largest decreases in this share were recorded in Latvia (from 51.3 % in 2002 to 42.9 % in 2022, or -8.4pp), Bulgaria ( -7.8pp) and Lithuania (-6.0pp). See Figure 7.
Source: Eurostat (nama_10_gdp)
Annual national accounts – evolution of the income components of GDP: tables and figures
Data sources and availability
GDP at market prices is the final result of the production activity of resident producer units.
The income components of GDP are the main focus of the generation of income accounts, which can also be presented by industries. The aim of the GDP income components is to show how the value added, which has been generated in the production process, covers compensation of employees and other taxes (less subsidies) on production. The balancing item of this account is the operating surplus of the production units and mixed income of the households who act as producing units in the domestic economy. They present the income components from the point of view of the source sectors, rather than the destination sectors. Figure 1 shows the generation of income account for the EU in 2022.
GDP and main components
Income components of GDP
Compensation of employees (D.1) is defined as the total remuneration, in cash or in kind, payable by an employer to an employee in return for work done by the latter during an accounting period. It is made up of two main components.
The first component is wages and salaries (D.11), both in cash and in kind, and the second is employers’ social contributions (D.12).
Some examples of transactions included in wages and salaries are basic wages and salaries that are payable to employees at regular intervals, enhanced payments such as overtime, night work, weekend work or disagreeable or hazardous circumstances. They include bonuses, holiday pay for official holidays and annual leave and housing allowances.
Employers’ social contributions (D.12) are the social contributions payable by employers to social security schemes or other employment-related social insurance schemes to secure social benefits for their employees. These may be either “actual” or “imputed” contributions. Examples of these include actual payments made by employers for the benefit of employees to insurers such as social security and other employment-related social insurance schemes. They also include imputed contributions which represent the counterpart to their social insurance benefits paid directly by employers to their employees without involving an insurance enterprise or autonomous pension fund with a segregated funding reserve.
Compensation of employees is also presented by industry through the NACE Rev.2 A*10 classification.
Taxes on production and imports (D.2) consist of compulsory, unrequited payments, in cash or in kind, which are levied by general government, or by the institutions of the EU in respect of the production and importation of goods and services, the employment of labour, the ownership or use of land, buildings or other assets used in the production process. These taxes are payable irrespective of profits made.
Subsidies (D.3) are current unrequited payments which general government or the institutions of the EU make to resident productions. Their objective is mainly for influencing levels of production, prices of product or the remuneration of the factors of production.
Gross operating surplus (B.2g) and mixed income (B.3g) is the balancing item of the generation of income account. Operating surplus is a measure of the surplus accruing from the production process before deducting any explicit or implicit interest charges, rent of other property incomes payable on the financial assets, land or other natural resources which have contributed to this production. The latter contains an element of remuneration for work done by the owner or other members of the households that cannot be separately identified from the return to the owner as an entrepreneur and it is associated with the self-employed.
Context
European institutions, governments, central banks as well as other economic and social bodies in the public and private sectors need a set of comparable and reliable statistics on which to base their decisions. National accounts can be used for various types of analysis and evaluation. The use of internationally accepted concepts and definitions permits an analysis of different economies, such as the interdependencies between the economies of the EU Member States, or a comparison between the EU and non-member countries.
