Declining purchasing power - Prices in the EU are rising faster than wages
Employed real wages in the EU have further decreased in 2023. Despite stronger wage growth and declining inflation, the purchasing power on average has decreased by 0.6%, according to the latest wage report of the Economic and Social Science Institute (WSI) of the labor-affiliated Hans-Böckler Foundation. In Germany, real wages also decreased by 0.3%. The price increases, which could not be offset by wage increases, were the cause.
Compared to 2022, the loss of purchasing power has significantly slowed down, according to the WSI further. Inflation-adjusted wages in the EU had fallen by 4.2%, in Germany even by 4.4%. However, in almost all EU countries, real wages are showing an increase for the current year. This will not offset the losses of previous years, according to WSI experts. Inflation-adjusted wage rates in Germany are now 0.8% below the level of 2015.
Czechs with the strongest decline
In total, real wages decreased in 12 of the 27 EU countries in 2023. Particularly significant purchasing power losses occurred in the Czech Republic (-4.4%), Malta (-3.8%), and Italy (3.3%). In several EU countries, real wages also increased, most strongly in the low-wage country Romania (plus 7.7%), and in Belgium (5.3%), where wages rise automatically with inflation according to law.
From the perspective of employees, the crisis has not yet been overcome, according to WSI researchers Thilo Janssen and Malte Lübke. "They have borne the majority of the real income losses caused by the energy price shock linked to Russia's attack on Ukraine." In terms of wage development, "catch-up needs still exist". Finally, consumer prices have permanently increased, they did not rise as quickly with the end of the inflation wave.
- Despite witnessing stronger wage growth and reduction in inflation, employed individuals in Europe still experienced a decrease of 0.6% in their real wages in 2023, as stated in the latest wage report from the Economic and Social Science Institute (WSI) of the labor-affiliated Hans-Böckler Foundation based in Düsseldorf, Germany.
- The wage report further reveals that compared to 2022, the rate of loss in purchasing power has significantly slowed down in the EU, with inflation-adjusted wages having fallen by 4.2% in the EU and 4.4% in Germany.
- According to the experts at the Hans Böckler Foundation, although real wages are showing an increase in almost all EU countries for the current year, these growths will not suffice to offset the losses experienced in previous years.
- The report indicates that inflation-adjusted wage rates in Germany now stand 0.8% below the levels recorded in 2015, highlighting the persistent impact of real income losses on European employees, particularly in Germany.
- Janssen and Lübke, researchers at the WSI, assert that employees have borne the majority of the real income losses caused by the energy price shock linked to Russia's attack on Ukraine, and express the need for wage development to catch up from this perspective.
