Marius-Jan Radlo These data show that the lower level of human capital is a source of lower utilisation of human resources in the EU economies. But these data also indirectly show that it is likely that institutional solutions present in the EU do not support job creation for employees with low qualifications. Institutional problems are also indirectly confirmed by the fact that the Union faces much more serious employment problems than does the US, including also long-term and structural unemployment, although these problems are also connected with a lower level of human capital. Figure 1. Average working time vs. income transfers and tax rate on low wage earners 2 2000 2000 Average working time (hours p.a.) ś rednioroczny czas pracy (godziny) Average working time (hours p.a.) ś rednioroczny czas pracy (godziny) 1300 1300 17% 34% 51% 6% 10% 14% 18% 22% Income transfers(%GDP) Tax rate on low wage earner Source: Author's calculation using: OECD, 2002c and Eurostat, 2004 As Figure 1 shows, the shorter average working time in many European countries can be explained by the fact that more sources of income other than salary are available for EU employees. Countries in which, in 2000, spending on income transfers represented a larger part of GDP had, at that time, a much shorter working time than the countries that spent less on these transfers. The correlation coefficient between these two variables amounts to −0.58, calculated on the basis of the data for EU member states, the US, Japan, Norway, 2. The tax rate on low wage earners calculates the income tax on gross earnings+ the employee's and employer's social security contributions and then expresses this sum as a% of the total labour cost for this low-wage earner. Tax rates are calculated for a single person without children. When in work, this person earns 67% of the average wages of full-time production workers in manufacturing. 78