Europe Sees First Real Wage Increase Since 2021 Thanks to Wage Hikes and Labor Actions
Wage hikes across Europe to lead to genuine wage growth for the first time since 2021, anticipated in the year 2024. - Euro's Increased Tariffs Result in Initial Yearly Wage Upsurge in 2024 After Two Years' Stagnation (since 2021)
In the European economy, significant progress is being made as purchasing power grows in countries like Austria (5.4 percent), Portugal (4.5 percent), and Slovakia (3.8 percent). Even Germany, with an inflation-adjusted increase of 2.8 percent, is beating the average. However, these wage hikes are still lower compared to 2020 in every country with available data.
For instance, wage-earners in the Czech Republic suffered a 11.4 percent loss, Italy saw a 9.1 percent decrease, and Spain experienced a 5.6 percent setback. The gap in Germany stands at 4.7 percent according to the WSI wage archive.
Currently, the Eurozone is witnessing a surge in strikes, with the frequency increasing over the past two years. "The unions earned these victories," states the Hans-Böckler Foundation's interpretation. These labor disputes have even cropped up in countries where they usually seldom occur.
Germany's predicted strike rate is 21 lost days per year and 1000 employees, placing it midway through Europe alongside the Netherlands. More strikes were recorded in Belgium (107 lost days), France (102 lost days), and Finland (93 days) in 2024.
Over the years, Germany and other European countries' real wages have faced mixed fortunes due to inflation patterns and economic growth dynamics. Although inflation has decreased, economic stagnation has put a damper on significant nominal wage increases. In fact, any increase in wages might only keep pace with or surpass inflation rather than signifying significant real wage growth.
Strikes across Europe frequently occur in response to high inflation and the need for enhanced wages, exerting pressure on employers and governments to offer wage hikes to prevent disruptions. These labor actions have played an essential role in securing wage increases, allowing workers to offset inflation to some extent, while also presenting economic policymakers with a delicate balance as they strive to maintain inflation controls.
Key Insights:
- Recent times have seen Germany and other European countries' real wages sway between growth and contraction, contingent on inflation patterns and economic growth dynamics.
- Germany's inflation has moderated significantly after a period of high inflation, dropping to around 2.1% in April and May 2025, down from much higher levels in preceding years. Despite this decrease, economic stagnation constrains significant nominal wage increases.
- Across the Eurozone, real wage growth varies greatly, contingent upon national economic conditions, inflation rates, and labor market dynamics. Countries often face inflationary pressures necessitating wage increases to preserve purchasing power.
- Strikes and labor actions in the Eurozone have contributed to wage increases, supporting workers in offsetting inflation but also posing a challenge for economic policymakers focused on inflation control.
The increase in real wages in several European countries, such as Austria, Portugal, and Slovakia, can be attributed to wage hikes and labor actions. However, these wage increases are still lower compared to 2020 in many countries with available data, pointing to a persistent gap. In addition, finance plays a crucial role in these wage hikes, as strikes and labor actions are often a response to high inflation and the need for enhanced wages, necessitating employers and governments to adjust their employment policies.
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