Wages and labour costs developments in the EU and its Member States
Introduction
Wage developments since 2022 have been shaped to a large extent by the pace of inflation and the challenging economic environment.
The high inflation in 2022 sparked by the energy crisis led to a delayed increase in nominal wages, resulting in significant losses in real wages and households’ purchasing power. Despite low unemployment rates and the implementation of support measures, living standards for workers and their families declined sharply and a number of social indicators deteriorated. However, inflation rates dropped in 2023 due to lower energy prices, and real wages started to recover mildly in the second half of the year, driven by robust nominal wage growth and falling inflation. Real gross disposable household income already started to increase at the beginning of 2023, also thanks to support measures. Looking forward, wage growth is likely to be constrained by the fragile growth context, with uncertainty around future inflation dynamics and increased concerns around productivity and competitiveness.
Against this background, this chapter reviews wage developments and prospects, and social impacts across income groups
Section 2.2 provides an overview of recent developments in nominal and real wages and their outlook. Section 2.3 discusses the persisting social effects of the high inflation period, for both low- and middle-income groups. Section 2.4 examines the room for further wage increases and the role of productivity growth. Finally, Section 2.5 reviews how policies could support sustainable and fair wages.