In the coffers of Italian companies, there is a reservoir of 46 billion euros of wasted incentives every year to be recovered for the benefit of businesses and workers themselves. This emerged from a PwC study entitled “Cost of wages in Italy: freeing competitiveness for growth” conducted on a sample of 400,000 companies with 13 million employees, with a labor cost of 457 billion, resulting in 33 billion euros of recoverable credits among inefficiencies, oversights, and failure to recover tax credits related to incentives ranging from relief for hiring young people, women, the South, in ZES, to expense reports. When projected across all Italian employees, it reaches 46 billion euros of recoverable tax incentives, explains Francesco de Mutiis, director People Transformation at PwC.
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Inefficiencies affect half of the companies
The Italian context, characterized by much bureaucracy and often discouraging regulations due to their complexity, opens many opportunities to recover inefficiencies on one of the main cost items for Italian companies, namely personnel costs. A recovery that is the goal of the platform, Jet Recupero AI by Jet HR, created to recover credits. Marco Ogliengo, CEO and co-founder of the tech company that provides personnel management consulting, says, “By analyzing our clients in the most technical details of payslips, we discovered a world of opportunities that remain systematically underutilized, such as incentives difficult to identify, measures requiring very precise technical application to be truly exploited, sometimes pure oversight. The phenomenon affects more than half of the companies in our sample of over 250 clients. Jet Recupero AI is an intelligent agent we have already used in several companies, observing an average saving per employee of over 1,500 euros.” Some examples include Lexroom with 210,000 euros in social security savings and 40,000 in management savings, Serenis with 101,000 euros in social security savings and 49,000 in management savings, Octopus Energy with 193,000 euros in social security savings and 36,000 in management savings, and Richmond with 41,000 euros in social security savings and 5,000 in management savings.
The issue of the excessively high tax wedge
In a country where the average tax wedge reaches 45.8%, compared to an OECD average of 35.1%, the fifth highest among the 38 member countries, almost one euro out of two does not reach the worker. According to PwC’s projection, for a labor cost of 100, about 46 are absorbed by taxes and contributions, and only just over half translates into net income for workers. This cost is one of the main areas for intervention to free competitiveness, as also agreed by Maria Anghileri, COO of Eusider Group, who highlights that “the main problem for Italian companies at this stage is the too high energy cost that prevents us from being competitive. Regarding wages, we all need to do more to be more attractive and overcome the issue of mismatch between labor demand and supply. For this reason, as Young Entrepreneurs of Confindustria, we have launched a proposal for IRPEF relief for under 35s with salaries up to 50,000 euros for the first 5 years. This would allow the worker to recover up to one thousand euros per month. We ask the government to make an effort in this direction and to look to the country’s future.”
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Levers to optimize labor costs
In 2025, the average hourly labor cost in Italy is about 32 euros, lower than both the EU average (34.9 euros) and the euro area average (38.2). However, the competitiveness issue does not only concern wage levels but how the cost is distributed among the worker, company, and tax system. Of the total hourly cost of 32 euros, about 23 euros are attributable to wages and salaries and about 9 euros to non-wage costs. This component accounts for 28.1% of the total, above the EU average of 24.8% and the euro area’s 25.6%, confirming the central role of contributions and taxation in the structure of Italian labor costs, which represent the main cost item for companies. The PwC study maps 33 levers for optimizing labor costs, divided into three categories: incentives with a fixed spending cap, levers expressed as a percentage based on recipient conditions, and managerial levers. These include exemptions for young people, women, and workers in ZES areas, welfare tools, electronic meal vouchers, VAT recovery on expense reports, certifications, and other often combinable measures. On the analyzed sample, PwC Italy estimates an average potential saving of about 31.2 billion euros, equal to about 7% of total labor costs. Even a seemingly small percentage reduction thus produces a significant economic impact on a large scale. Incentive contributions lead the value. 57% of the estimated potential savings come from levers with a fixed spending cap, 33% from managerial levers, and the remaining 10% from percentage-based levers. Optimizing labor costs therefore does not depend on a single measure but on the ability to combine contribution incentives, organizational tools, and cumulativeness criteria.
A potential saving on labor costs exceeding 7%
Potential savings by company size show that the benefit of adopting optimization levers grows in absolute value with company size, while remaining in double-digit percentages of labor costs even in the smallest companies: from 7.37% of labor costs per company in micro-enterprises, to 5.38% in small, to 4.47% in medium, and 4.51% in large companies. In conclusion, the problem does not seem to be the absence of levers but the difficulty in identifying and applying them all. Delays in implementing decrees, operational application of regulations, fragmentation among national collective labor agreements, territorial and bureaucratic variables make rapid manual verification unsustainable, especially on large numbers of employees, and it is in this context that technology and artificial intelligence can play a role in improving company efficiency.
