Wow, tipping is a heated debate in the US? So weird.
Here in Sweden (and most of Europe I think), tipping happens, but not all the time. Where I work, at a hotel/restaurant, I earn about $14/hour (minimum wage for an 18-19yo, like I am) . I do cleaning, breakfast, a bit of serving and a bit of bartending. That is both before, and after tips. You see, if someone leaves a tip, the entire staff share it. The tips usually vary in the 2-8% range. Most places have a tip-jar of some sort. In our case, we payed a part of our team-building trip with tips.
The reason why we all share it, is because we're all tipped. When you buy something, for example in a restaurant, you don't just pay for the food. You pay for everything. The location, the building, the interior, the electricity, the appliances in the kitchen, the service and the staff. And if someone leaves a tip, they tip on the whole thing, on the experience. I guess food in restaurants are generally more expensive here though. Our menu has 4 main courses, and they range from about $27 to about $45, and we are in no way a "high-end" type place.