COVID-19, Russia’s invasion of Ukraine, hovering vitality costs, report inflation and different elements are all placing strain on wages throughout Europe. Rising prices of dwelling are hitting tens of millions of European households laborious.
Actual wages, adjusted for inflation, fell in a 3rd of the European international locations analyzed within the 5 years to early 2026.
So which international locations noticed the biggest decline in actual wages from 2021 to the primary quarter of 2026? And the place have actual wages elevated essentially the most? Why are some international locations outliers in actual wage progress, although actual wage progress is declining throughout the euro space?
In response to the OECD Employment Outlook 2026, which covers 27 European international locations, however not all EU member states, actual wages fell cumulatively in 9 international locations from 2021 to the primary quarter of 2026.
affect of 2022-2023 value of dwelling disaster
“Actual wages have been nonetheless affected by the 2022-2023 value of dwelling disaster within the first quarter of 2026,” OECD Employment Outlook Editor-in-Chief Andrea Bassanini instructed Euronews Enterprise.
“As a result of sectoral collective bargaining agreements aren’t renewed yearly and are normally staggered, the restoration of negotiated wages took a very long time and was by no means totally recovered.”
He additionally identified that the authorized minimal wage is roughly in keeping with costs.
actual wages have decreased extra 6% in Italy
Italy had the largest decline, with actual wages falling by 6.1%. Ronald Jansen, former chief economist of the European Commerce Union Confederation (ETUC) and the Commerce Union Advisory Council (TUAC), mentioned that employers’ systematic delay in new agreements and the weakening bargaining place of commerce unions have been contributing to Italy’s decline in actual wages.
Michele Bavaro, an economist on the École Normale Supérieure, mentioned Italy’s traditionally lengthy delays in renewing contracts meant that nominal wages have been gradual to recuperate after rising inflation.
Richard Grieveson and Meriem Gökten of the Vienna Institute for Worldwide Economics (WIIW) additionally pointed to Italy’s low productiveness, gradual financial progress and comparatively gradual nominal wage adjustment.
The Czech Republic and Sweden recorded declines of 5.8% and 4.8%, respectively. Actual wages fell by 2.1% in Denmark and a pair of% in Spain. The euro space as a complete fell by 1.8% throughout this era.
Slovakia, Finland, Eire and Switzerland additionally noticed slight declines, starting from 0.7% to 1.4%.
Considerations about accelerating inflation and job insecurity
Ronald Jansen identified that inflation will speed up within the euro space from 2021 to 2022.
“Whereas collective bargaining within the years following the Nice Inflation sought to revive the buying energy of wages, staff and unions realized that their bargaining energy was hampered by job insecurity after years of gradual financial progress, considerations about deindustrialization resulting from competitors from China, and a US-led tariff warfare that undermined entry to key European export markets,” he instructed Euronews Enterprise.
Actual wages have been flat in Belgium, whereas France and Estonia recorded modest will increase of simply 0.1%.
Türkiye: Vital outlier
Turkey stands out as essentially the most notable outlier, recording the very best actual wage progress fee of 78.6% regardless of an inflation fee of 32% in mid-2026.
“Whereas the 79% enhance in actual wages in Turkey is arithmetically appropriate, it overstates the rise in dwelling requirements,” Grieveson and Gökten instructed Euronews Enterprise.
“Actual wages began 2021 at low ranges, nonetheless weak after the 2018 forex disaster, and a few of the rise was truly because of the restoration.”
He additionally mentioned that the principle issue for the sharp enhance from 2022 to 2023 is primarily the election-driven doubling of the minimal wage.
Grieveson and Gökten added: “After the 2023 election, changes reverted to annually and have remained beneath inflation ever since.”
In addition they questioned the reliability of Turkey’s inflation statistics, citing opposition claims that official statistics are manipulated.
Hungary has the very best progress fee within the EU
Hungary is in second place with 29.8%, however Hungary itself is an outlier throughout the EU. In Poland, actual wages rose by 16.5%. The highest three international locations are all exterior the euro space.
“Hungary’s robust actual wage progress over the previous 5 years displays a mix of structural labor shortages, authorities wage insurance policies and a post-inflationary catch-up course of,” mentioned Peter Bilovács, chief economist at ING.
He mentioned Hungary’s distinctive actual wage efficiency mirrored not an irregular enhance in productiveness, however relatively the mixed results of a good labor market, an aggressive minimal wage coverage, ongoing wage convergence, and staff’ efforts to revive buying energy after the inflationary shock.
Inside the euro space, Lithuania recorded the very best actual wage progress of 14.8%. No different nation recorded double-digit will increase. Actual wages additionally rose by 7.4% in Latvia, 6.6% in Slovenia, 5.6% in Portugal, 4.7% in Greece and 4.1% in Luxembourg.
Main economic system: United Kingdom Lead actual wage progress
Amongst Europe’s 5 largest economies, the UK ranked first with a rise of three.6%. Actual wages rose by lower than 1% in Germany and France, at 0.9% and 0.1%, respectively. Italy recorded the steepest decline of the international locations analyzed, with Spain experiencing a 2% decline.
“The primary necessary issue is the expansion of the authorized minimal wage. In each Germany and the UK, the authorized minimal wage exceeds government-determined inflation, and in France and Spain it’s nearly equal to inflation,” Bassanini mentioned.
Grieveson and Gökten mentioned Britain’s comparatively versatile wage-setting system and protracted recruitment difficulties enable nominal wages to react extra rapidly to inflation than in some eurozone economies.
The report notes that the first-quarter 2026 numbers predate the current spike in vitality costs following the joint U.S. and Israeli assault on Iran and the Iranian authorities’s response.
