Yeah, I was chatting with a friend living in Spain once, and ascending the ladder in responsibility didn't make sense, as whatever salary increase he got would be heavily taxed, and it didn't make sense to bear much more responsibility for just a little bit of extra money a year.

As you say, avg workers are "fine" there, but for anyone trying to standout or grow in their career, they will hit an income ceiling very fast due to the high taxation, so it doesn't make sense to keep on growing as you are not properly rewarded for it.