Despite some noticeable wage increases, most workers in Europe have less money in their pockets in real terms because prices are rising even faster.
Real wages for employees in the EU continued to fall in 2023. Despite stronger wage increases and falling inflation, purchasing power fell by an average of 0.6 percent, according to the current wage report of the Economic and Social Science Institute (WSI) of the Hans Böckler Foundation, which is close to the trade unions. Real wages also fell by 0.3 percent in Germany. This is due to price increases that could not be offset by the wage increases.
Compared to 2022, however, the loss of purchasing power has slowed down significantly, the WSI continues. Due to the high inflation rates at the time, wages in the EU had fallen by 4.2 percent in real terms, and in Germany by as much as 4.4 percent. For the current year, real wages are again expected to increase in almost all EU countries. However, this will not compensate for the declines of recent years, according to the WSI experts. Adjusted for prices, collective wages in Germany are now 0.8 percent below the 2015 level.
Czechs with the biggest decline
Overall, real wages fell in 12 of the 27 EU countries in 2023. There were particularly significant losses in purchasing power in the Czech Republic (minus 4.4 percent), Malta (minus 3.8 percent) and Italy (3.3 percent). However, real wages also increased in several EU countries, most strongly in low-wage Romania (plus 7.7 percent) and Belgium (5.3 percent), where wages automatically rise with inflation by law.
From the perspective of employees, the crisis has not yet been overcome, judged WSI researchers Thilo Janssen and Malte Lübke. “They have borne the majority of the real income losses associated with the energy price shock following the Russian attack on Ukraine.” There is “still a need to catch up” in terms of wage development. After all, consumer prices have been rising permanently, they are just not rising as quickly as the wave of inflation has ended.
Source: Stern
