On 14 March 2022 the OECD published on their website a working paper entitled Taxation of Part-time Work in the OECD. The working paper sets out a summary, with detailed data, of the taxation of part-time work in OECD countries, including calculations of effective tax rates for part-time and full-time work. The paper looks at the effective tax rates for male and female part-time workers and for different types of household.

Part-time employment has risen in recent years as a proportion of total employment, partly as a consequence of greater participation of women in the labour force participation and the general pursuit of a better work-life balance. The average earnings of part-time workers have however decreased in relation to full time workers and there is more involuntary part time work in many places.

Non-standard workers, including part-time staff, are up to 40% of people employed in some of the sectors most affected by the Covid containment measures in the European OECD countries, and these workers were most at risk of losing income or losing their jobs. The pandemic also caused a rise in underemployment, with reductions in working hours being used by employers to deal with the effects of the crisis in the first stages of the pandemic.

An analysis of the tax situation of part-time workers can help policymakers to gain an insight into the impact of taxation on the choice of employment form. The statistics indicate that the average tax rates applying to part-time workers are lower than those applied to full-time workers in most of the OECD countries. The difference is however mostly due to differences in the levels of earnings, and is therefore caused by the progressive tax systems, rather than by differences in the tax treatment of the different types of employment.

To analyse the position the paper uses the net personal average tax rates (NPATRs) for part-time workers and compares them to those of full-time workers. The study concludes that differences between the taxation of part-time and full-time workers is mainly due to differences in earnings levels between the two groups, and therefore to the progressivity of countries’ tax systems, rather than to differences in the tax treatment of the types of employment.

In most OECD countries there are no differences in the tax or benefit provisions applying to part-time and full-time workers. However, some countries apply different tax and benefit provisions to the two types of employment. The paper identifies some countries where differences in the effective tax rates arise from both differences in earnings levels and differences in the tax treatment of part-time workers.

Across all countries, differences in the tax rates (calculated for single part-time workers without children) result from lower income taxes; lower social security contributions; and higher cash benefits. As a result of these differences in taxation, in most countries the difference in post-tax wages between part-time and full-time workers is less unequal than pre-tax wage differences.